Can I Take a Hardship Withdrawal From My 401(k)?

A 401(k) hardship withdrawal lets you pull money from your retirement account before age 59½ to cover a serious financial emergency, but only if your employer’s plan allows it and your reason fits one of the IRS-approved categories. The money comes out permanently — you cannot repay it the way you would a 401(k) loan — and you will owe income tax plus, in most cases, a 10% early withdrawal penalty on the amount you take.¹ Before anything else, check your Summary Plan Description or ask your plan administrator whether hardship withdrawals are offered. Not every plan includes them.

Reasons the IRS Will Accept

The IRS maintains a “safe harbor” list of financial needs that automatically qualify. If your reason is on the list, the plan administrator does not have to judge whether your situation is severe enough.²

Medical expenses that qualify as medical care under IRC Section 213(d) for you, your spouse, your dependents, your children, or your plan’s primary beneficiary. The costs do not have to exceed the 7.5% of adjusted gross income threshold used for the medical expense deduction.³
Costs directly tied to buying a principal residence, not counting ongoing mortgage payments.
Tuition, related fees, and room and board for the next 12 months of postsecondary education for you, your spouse, your children, your dependents, or your plan’s primary beneficiary.
Payments needed to prevent eviction from, or foreclosure on, your principal residence.
Funeral or burial expenses for you, your spouse, your children, your dependents, or your plan’s primary beneficiary.
Repairs to your principal residence for damage that would qualify as a casualty loss (fire, storm, natural disaster). The Tax Cuts and Jobs Act restriction limiting personal casualty deductions to federally declared disasters does not apply here.³
Expenses and losses from a FEMA-declared disaster in an area that includes your principal residence or place of employment.

p>Routine home upkeep, vacations, credit card debt, and car repairs are not on the list. Your plan may also recognize only some of these categories, so the Summary Plan Description is the final word on what your plan will accept.

Whose Expenses Count

For medical, education, and funeral expenses, the qualifying group is broad: you, your spouse, your children, your dependents, and your plan’s primary beneficiary.³ A primary beneficiary is whoever you have designated to inherit your account, even someone who is not a spouse or dependent.

Eviction prevention, foreclosure prevention, and home repair distributions cover only your own principal residence. You cannot pull money to keep a parent or sibling from being evicted, even if you support them.

How Much You Can Withdraw

The withdrawal is capped at the amount you actually need to cover the qualifying expense. You can include enough to cover the income taxes and penalty you will owe on the distribution itself, but you cannot pad the request for a cushion.²

You also have to show you have no other reasonable way to pay for the expense. You are no longer required to take a 401(k) loan first — the Bipartisan Budget Act of 2018 removed that step — though some plans still keep it in place voluntarily.² The plan administrator can rely on your written statement that you lack other resources unless the administrator actually knows otherwise.³

What It Costs in Taxes

A hardship withdrawal is taxed as ordinary income in the year you receive it. The full amount is added to your other earnings and taxed at your regular federal rate.⁴ If you are under 59½, you owe an additional 10% early withdrawal tax on the taxable portion.⁵ State income tax may apply too, ranging from roughly 2% to over 13% depending on where you live and your bracket.

Your plan administrator withholds federal taxes before sending the balance to you. Hardship distributions are not eligible rollover distributions, so the mandatory 20% rollover withholding does not apply, but the amount withheld may fall short of what you actually owe. Set money aside for a possible tax bill at filing time.

And unlike a 401(k) loan, a hardship distribution cannot be paid back into the plan or rolled into another retirement account. Once it comes out, it is gone.³

When the 10% Penalty Does Not Apply

Several exceptions eliminate the 10% additional tax, though regular income tax still applies:⁶

You separate from service during or after the year you turn 55 (age 50 for state or local government public safety employees) and take distributions from that employer’s plan.
You are certified by a physician as terminally ill.
You are a victim of domestic abuse by a spouse or domestic partner. The exception, available for distributions made after December 31, 2023, is limited to the lesser of $10,000 (adjusted for inflation) or 50% of your account balance.
You take a series of substantially equal periodic payments based on your life expectancy.

The Long-Term Cost

Taxes and the penalty tell only part of the story. A $10,000 hardship withdrawal at age 35 might net you only $7,000 to $8,000 after federal and state taxes and the 10% penalty. Left invested in a tax-deferred account instead, that same $10,000 could have grown to $100,000 or more by retirement, depending on your returns and the years remaining.

One rule change does soften the blow. Plans can no longer force you to stop contributing for six months after a hardship withdrawal — that suspension was eliminated for distributions made after December 31, 2019.³ You can keep making elective deferrals and receiving any employer match right after the withdrawal.

How to Apply

Find your plan administrator in your Summary Plan Description or on a quarterly account statement. That may be your employer’s HR department, a recordkeeper such as Fidelity or Vanguard, or another entity named in the plan documents. Ask for the hardship withdrawal application or find out whether requests go through an online portal.

Since 2023, the SECURE 2.0 Act allows plans to accept a simple self-certification instead of detailed documentation. If your plan has adopted it, you sign a written statement confirming that your reason falls into a safe harbor category, that the amount does not exceed what you need, and that you have no other way to cover the expense. The administrator does not have to collect supporting documents unless there is reason to doubt the certification, but you should keep your own records.³

If your plan has not adopted self-certification, gather documents that match your situation: itemized medical bills, a signed home purchase contract, tuition statements for a specific term, or an eviction or foreclosure notice. Processing runs anywhere from a day to about a week. Once approved, the money arrives by direct deposit or check, and the distribution shows up on a Form 1099-R that you report on your tax return.

Alternatives Worth Considering First

Because a hardship withdrawal is expensive and permanent, look at other options before committing.

401(k) Loan

If your plan offers loans, you can borrow up to 50% of your vested balance or $50,000, whichever is less, and repay yourself with interest over up to five years. The money is not taxed as long as you follow the repayment schedule, and the interest goes back into your own account.¹ The catch: if you leave your job before repaying, the unpaid balance may be treated as a taxable distribution.

Emergency Personal Expense Distribution

SECURE 2.0 also created a smaller emergency option. You can withdraw up to $1,000 per calendar year for an unforeseeable personal or family emergency with no 10% penalty and no documentation, since you self-certify the need.⁶ You have three years to repay it, and full repayment lets you recover the income taxes paid. If you do not repay, you cannot take another such distribution for three calendar years.⁷ Your plan has to have adopted the provision for it to be available.

Rule of 55

If you have separated from an employer during or after the year you turned 55, you can take distributions from that employer’s 401(k) without the 10% penalty. This does not apply to IRAs, and it covers only the plan held by the employer you just left, not plans from earlier jobs.⁶

1
Internal Revenue Service. Hardships, Early Withdrawals and Loans
2
Internal Revenue Service. Retirement Topics – Hardship Distributions
3
Internal Revenue Service. Retirement Plans FAQs Regarding Hardship Distributions
4
Internal Revenue Service. 401(k) Plan Hardship Distributions – Consider the Consequences
5
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
6
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
7
Internal Revenue Service. Notice 2024-55 – Certain Exceptions to the 10 Percent Additional Tax Under Code Section 72(t)