401k Hardship Withdrawals - An Overview

Written by Rick Meigs, Publisher, 401khelpcenter.com


Continued from page 1

The following four items are considered byrepparttar IRS as acceptable reasons for a hardship withdrawal:

* Un-reimbursed medical expenses for you, your spouse, or dependents. * Purchase of an employee’s principal residence. * Payment of college tuition and related educational costs such as room and board forrepparttar 112652 next 12 months for you, your spouse, dependents, or children who are no longer dependents. * Payments necessary to prevent eviction of you from your home, or foreclosure onrepparttar 112653 mortgage of your principal residence.

Hardship withdrawals are subject to income tax and, if your are not at least 59½ years of age,repparttar 112654 10% withdrawal penalty. You do not have to payrepparttar 112655 withdrawal amount back.

For more information on this and other 401k issues, go to www.401khelpcenter.com.

Mr. Meigs is the founder and President of 401khelpcenter.com, LLC a three-year-old Internet Company based in Portland, Oregon. It is a leading provider of information, opinion, analysis, news, rules, and other 401k resources for plan sponsors, small businesses, and employees.


401k Plan Loans - An Overview

Written by Rick Meigs, Publisher, 401khelpcenter.com


Continued from page 1

There are generally four reasons given to avoid 401k loans if possible:

* Lower investment return. According torepparttar General Accounting Office,repparttar 112651 interest rate you pay yourself on your plan loan is often less thanrepparttar 112652 rate your plan funds would have otherwise earned, and you loserepparttar 112653 benefits of compound interest. * Smaller contributions. Because you now have a loan payment, you may be tempted to reducerepparttar 112654 amount you are contributing torepparttar 112655 plan and thus reduce your long-term balance. * If you quit working or change jobs, you must pay backrepparttar 112656 loan right away. It's not uncommon for plans to require full repayment of a loan within 60 days of termination of employment. If you don't repay,repparttar 112657 loan is considered defaulted, and you are taxed onrepparttar 112658 outstanding balance, including excise taxes in many cases. * Repayment of principal and interest is made with after-tax dollars. By contrast, a home equity loan from a bank is often structured so thatrepparttar 112659 interest you pay is tax-deductible. On a larger loan, this could add up to significant savings.

Go to www.401khelpcenter.com for more information on this and other 401k issues.

Mr. Meigs is the founder and President of 401khelpcenter.com, LLC a three-year-old Internet Company based in Portland, Oregon. It is a leading provider of information, opinion, analysis, news, rules, and other 401k resources for plan sponsors, small businesses, and employees.


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