What happens when I need my 401k (what's left of it), to feed my family?

[Tampa Rob]

I wonder if there any provisions for emergency withdrawls.

What a country. Work hard, save frugally, gone in an instant.

Jesus Wept.

TR

[Kahuna]

1. Obama has a proposal to allow an emergency withdrawal without

penalty. :patriot:

[Tampa Rob]

2. I had heard NOTHING of such a thing! Thanks so much, you made my night!

TR

[Sanctified]

10. Isn't his proposal no penalty on just 15% of your totall amount up to $10,000?

That is hardly going to help, I would rather see 50% up to $50,000.

[Muttocracy]

3. what Kahuna said, plus some plans allow loans at reasonable rates

a while back I took out a loan when I was unemployed to get by, and took another one later to pay off credit card debt that was at a much higher rate. Loans don't show up on your credit reports because you're really taking a loan from yourself and they keep part of your savings aside as collateral.

[MazeRat7]

4. You will pay the tax you avoided and a penality for taking the money...

Of course that is dependent on your 401k being there and your having a legit excuse to withdraw the money...

Peace,
MZr7

Edited: I said "interest", should have been more clear by saying "tax".

[oldnslo]

5. Plus your withdrawal being taxed as regular income.

[Tampa Rob]

6. Thanks for all the advice. I'm sincerely hoping it doesn't get to that.

My retirement has dropped almost 50% in a year. Both our jobs are in jeopardy.

I hope Obama's plan takes out the penalty on early withdrawl....hell, it wouldn't hurt my feelings if he took the "taxed" part out, either!

TR

[Sirveri]

7. I'm in the same boat, probably lost over 2k to the market now.

Sure, 10k in retirement isn't a huge ammount for a 28 year old. But if I get desperate it's nice to know I have options.

[IndyOp]

8. Penalty-free hardship withdrawals of 15% up to $10,000 without penalty (subject to normal taxes)

A RESCUE PLAN FOR THE MIDDLE CLASS

2. IMMEDIATE RELIEF FOR STRUGGLING FAMILIES

Penalty-free hardship withdrawals from IRAs and 401(k)s in 2008 and 2009. Many
families are going to be facing unique economic hardship over the coming year. To help
these families pay their bills and their mortgages and make it through these tough times,
Obama is calling for legislation that would allow withdrawals of 15% up to $10,000 from retirement accounts without penalty (although subject to the normal taxes).

There is a PDF of the Economic Rescue Plan for the Middle Class on this page -- under the heading "More on the Economy"

http://www.barackobama.com/issues/economy/index.php

[elocs]

9. It would be stupid to starve if you had food stored for the future.

If you need it, the future is now.

[Horse with no Name]

11. Mine will allow you to withdraw if you are sick or getting evicted

those are about the only things they will cut you any slack on.
Off topic...you might think about changing your 401k to short term bonds only...you'll lose less in the long run.

[melm00se]

12. here are the rules

http://www.401khelpcenter.com/401k_education/hardship_withdrawal_article.html

Hardship Basics

A hardship withdrawal is not like a plan loan. The withdrawal may be difficult to get, and costly if you receive it. Remember, your 401k is meant to provide retirement income. It should be a last-resort source of cash for expenses before then.

Knowing that workers would resist putting aside money for decades with no chance to access it, Congress made provisions in the 401k rules to allow plan withdrawals in a limited number of hardship situations. These include:

* 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 for the 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 on the mortgage of your principal residence.
* For funeral expenses and repair of a primary residence.