What is a 401(k) hardship withdrawal?

A 401 (k) hardship withdrawal is a withdrawal from a 401 (k) for an "immediate and heavy financial need." It is an authorized withdrawal, meaning the IRS can waive penalties, but it does not relieve you of your tax responsibilities. Before you tap your retirement savings to cover a large, unexpected expense, check that you're allowed to do so.

How long does a 401(k) withdrawal take?

A hardship withdrawal can take 7-10 business days, which includes a review of your withdrawal application. How Do You Prove Hardship for a 401 (k) Withdrawal? You do not have to prove hardship to take a withdrawal from your 401 (k). That is, you are not required to provide your employer with documentation attesting to your hardship.

What happens if I take early withdrawals from my 401(k)?

“Anytime you take early withdrawals from your 401 (k), you’ll have two primary costs — taxes and/or penalties — which will be pretty well defined based on your age and income tax rates, and the foregone investment experience you could have enjoyed if your funds remained invested in the 401 (k).