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Asked 10/11/2009
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We are forced to withdraw our 401K to stop foreclosure on our home. Are there any new rules on early distribution we need to be aware of? Due to 2 deaths in our immediately family (a mother on one side and a father on the other), we fell behind in payments. I also lost my job during this time due to layoff.
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Answer 1/1 - Submitted 10/11/2009
"Hardship" is a term used by the 401(k) trustees to permit distributions, unfortunately it isn't an exception to early withdrawl penalties for the IRS.
Since your husband is still employed, I don't see any exceptions to the penalty that might apply to you. Expect to pay regular income tax on the distribution, plus a 10% penalty.
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