401K Retirement Plan was created in order for those working individuals to have a good substantial amount to have with when they retire. Yes, you have set aside a part of your income in order for you to live a life you want to live when you reach the age of retirement or when you want to retire from working. However, what if you are into a financial emergency, you need a substantial amount to pay for your medical bills and other expenses, what you should do? It is suggested that you should only withdraw money from your 401K only when you do not have any option left. Remember, you are slashing money out from your future, and if you will always do this withdraw and withdraw money from your retirement plan you will be shocked, there is no money left for you when you retire. Be sure you know the 401K withdrawal rules before withdrawing the money. It is not as simple as withdrawing money from the atm machine.
You should be familiar with 401K withdrawal rules before you decide on withdrawing money from your retirement plan. Most likely, the retirement plans of which working individuals have will only allow withdrawal only if it is under the so-called term financial hardships. What are these? Most of the reasons that are classified under such term are: death of the workers spouse or a big medical bill.
Most of the employers set up 401K withdrawal rules based on the guidelines that the Internal Revenue setup. This means that when you are in dire need of cash immediately, then supported with a reason under financial hardship, you are eligible for such withdrawal.
Here are four reasons that under 401K withdrawal rules that would allow you to make a withdrawal:
1. When you incur a surmountable amount for medical bills either for your spouse, family or even you.
2. Preventing the foreclosure of your home.
3. Purchasing a house which will become your primary residence, this excludes paying your mortgage.
4. Paying for school fees either for post-secondary or university for your dependents, spouse and children.
One of the 401K withdrawal rules that you should remember is that when you withdraw money based on the reasons mentioned above you will be suspended from making any annual contributions for the period of 6 months. Remember, when you need cash that getting money out from your 401K retirement plan will affect your future. It should be your last resort.
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