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What is a “contribution suspension”?

A “contribution suspension” is required after you take a hardship withdrawal from your Single(k) plan. This means you cannot make individual pre-tax or after-tax contributions to the retirement plan for six (6) months. Failure to suspend contributions will result in the contributions being forfeited and re-categorized as ordinary income.

What are the tax consequences of taking a hardship withdrawal?

A hardship withdrawal is a taxable event. The money you take from the plan is taxable in the year in which it is taken. Also, if you are under the age of 59 ½, you will also be subject to a 10% early withdrawal penalty.

What documentation is required?

The amount of your hardship withdrawal is limited to the amount you need to meet the immediate hardship, including taxes and penalties. This is illustrated by your supporting documents. The IRS also restricts the type of money you can withdraw from your Single(k): You may withdraw pre-tax contributions. You may withdraw profit-sharing contributions and the…

If I have a hardship, how much can I withdraw?

The amount of your hardship withdrawal is limited to the amount you need to meet the immediate hardship, including taxes and penalties. This is illustrated by your supporting documents. The IRS also restricts the type of money you can withdraw from your Single(k): You may withdraw pre-tax contributions. You may withdraw profit-sharing contributions and the…

What does the IRS consider as a “hardship”?

The following are considered “hardships” by the IRS: Medical expenses described under Code §213(d) incurred or anticipated to be incurred by the employee, the employee’s spouse or dependent. This is for all deductible medical expenses — not just the amounts that actually exceed 7.5% of adjusted gross income. Purchase (excluding mortgage payments) of a principal…

Can I take a hardship withdrawal from my 401(k) plan?

Single(k) allows hardship withdrawals provided that certain criteria are met. In order to comply with IRS regulations, you are required to first take all possible distributions from the plan, including any rollover contributions and the maximum loan amount available, prior to requesting a hardship withdrawal.