For those people who are currently experiencing financial difficulties, turning to their 401k plans is a great way to supplement funds until such time that they become financially stable once again. For those who are still employed, however, it may be a little tricky and difficult especially if they would like to stop automatic withdrawals on their 401k plans. But there are still some ways that employed people can tap into their 401k plans.
A person can try to contact a 401k plan administrator or manager and ask about their policies. For those who do not want to withdraw the whole amount of money that they have, the remaining funds could be rolled into a specific IRA account. By contacting a financial institution, you would get all the help you need in completing the required paperwork and documentation. There is also a hardship exception to withdrawing funds that you can apply for. However, if you happen to still be employed with a plan sponsor, then you may be restricted from making any withdrawals. Automatic withdrawals can also be restricted. These allow a borrower to take out loans of up to fifty percent of the vested amount and are usually repayable within five years unless the borrower would be using the money in order to pay for a down payment of a house.
It's also a good idea to hold back on the taxes when receiving and applying against automatic withdrawals on your 401k funds. Plan administrators often hold back ten percent for taxes but you may be more liable for more as it depends a lot on the kind of tax bracket that you have. Try holding back twenty percent to ensure that you would not get unexpected tax bills after each year. Don't take on more than the Hardship exceptions as you may be penalized. Pay back your loans on time in order to avoid trouble with penalties and additional payments.
See article at, LoanSafe.org
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