A hardship withdrawal is an emergency removal of funds from a retirement plan, sought in response to what the IRS terms "an immediate and heavy financial need. This type of special distribution may be allowed without penalty from such plans as a traditional IRA or a 401k, provided the withdrawal meets certain criteria regarding the need for the funds and their amount. However, even if penalties are waived (notably, the 10% penalty for withdrawals made before age 59½), the withdrawal will still be subject to standard income tax. Hardship withdrawals can provide needed funds in an emergency—without a credit check—but they should be used very sparingly and only if all other alternatives have been tried or dismissed. By exposing funds held in a tax-sheltered account to income tax, a hardship withdrawal is likely to boost your tax bill for the year.Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Ver todos los episodios