Fidelity 401k Hardship Withdrawal Terms And Conditions Pdf
If you're facing a financial emergency, you might be able to tap into your 401k balance with a hardship withdrawal. However, taking money out of your retirement account early can come at a steep cost. In this article, we will provide a comprehensive guide to Fidelity 401k hardship withdrawal terms and conditions.
What is a hardship withdrawal?
A hardship withdrawal is a withdrawal from your 401k plan that you can take to cover an immediate and heavy financial need like medical expenses, tuition, or funeral costs. It’s important to note that not all 401k plans offer a hardship withdrawal option.
When can you take a hardship withdrawal?
Hardship withdrawals are only available in specific situations. The IRS defines the following as acceptable reasons for a hardship withdrawal:
- Medical expenses for you, your spouse, or your dependents
- Purchase of a primary residence
- Payment of tuition, related educational fees, and room and board expenses for the next 12 months of post-secondary education for you, your spouse, your children, or your dependents
- Payments necessary to prevent eviction from, or foreclosure on, your primary residence
- Funeral expenses for your deceased parent, spouse, children, or dependents
- Expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under Section 165 of the IRS code
It’s important to note that even if your situation meets the IRS criteria for a hardship withdrawal, it’s not guaranteed that your 401k plan allows for them.
What are the Fidelity 401k hardship withdrawal terms and conditions?
If your employer’s 401k plan is managed by Fidelity, you will need to follow their terms and conditions to apply for a hardship withdrawal. Here are the key things you need to know:
- You will need to prove that you have no other resources available to help you cover the financial need.
- The amount you can withdraw will depend on the specific financial need you’re experiencing and the assets available in your 401k plan.
- You will need to pay taxes on the amount you withdraw and potentially a 10% early withdrawal penalty if you’re under the age of 59 ½.
- You’ll be required to pay back any outstanding loans you have from your 401k plan first before you can take a hardship withdrawal.
- You won’t be able to contribute to your 401k plan for six months after you take a hardship withdrawal.
How to apply for a hardship withdrawal from a Fidelity 401k plan
If you believe you meet the criteria for a hardship withdrawal from your Fidelity 401k plan, you will need to follow these steps:
- Log in to your Fidelity account and navigate to your 401k dashboard.
- Click on the tab that says “Withdrawals” and select “Hardship Withdrawal.”
- Complete the required fields for the application, which may include documentation of your financial need.
- Submit the application and wait for the plan administrator to review it.
If your application is approved, the funds will be distributed directly to you. However, keep in mind that this will impact your retirement savings, and you’ll need to plan accordingly to make up for the loss.
Conclusion
While taking a hardship withdrawal from your Fidelity 401k plan may seem like an easy way to access funds in a financial emergency, it does come at a cost. You’ll need to weigh the benefits of the withdrawal against the long-term impact on your retirement savings. If you’re unsure whether a hardship withdrawal is the best option for you, consider speaking with a financial advisor who can help you evaluate your options.