401k hardship withdrawl

[Dudeman1]

What is the name of your state (only U.S. law)? WI

If someone takes out a 401k hardship and then discovers they dont need it what should they do. Was approved, and sent a check but after cashing it found out they did not have to? I believe it was for medical

 

[HRZ]

THere are some provisions that allow for a prompt redeposit of the funds, within 60 days , into a qualified plan that avoid the tax issues...details are beyond me but if inside of 60 days I'd sure scramble to,check out the points ......

 

[Taxing Matters]

What is the name of your state (only U.S. law)? WI

If someone takes out a 401k hardship and then discovers they dont need it what should they do. Was approved, and sent a check but after cashing it found out they did not have to? I believe it was for medical

If more than 60 days have passed since the distribution there is nothing that can be done to avoid including the distribution into income on the employee’s federal income tax return. If it has been less than 60 days then a roll over into another qualified plan like an IRA should suffice to avoid the income inclusion. The IRS has a page that discusses roll overs in detail, which you will find here:

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions

 

[LdiJ]

What is the name of your state (only U.S. law)? WI

If someone takes out a 401k hardship and then discovers they dont need it what should they do. Was approved, and sent a check but after cashing it found out they did not have to? I believe it was for medical

Was your hardship withdrawal a loan or an actual distribution? Many hardship withdrawals from 401ks are actually loans rather than distributions. If its a loan, then there are no tax consequences at all.