What is the name of your state? south carolina**************anybody got advice on how to get 401k to let us get money out for foreclosure prevention. they tell us that home will have to be just about put up for sale on courthouse steps before we can get money out for that...we have outstanding loan that we would have to pay before getting another loan....hardship (foreclosure) has to be your home about to be auctioned off, at that point more and excessive fees are added on that puts you in a worse position than if they would let you save your home before all the added fees are tagged on....any advice...we have been on repayment plan to save our home and have missed no pymts on repayment plan for 23 months...but we have 2000.00 balloon pymt due by end of march ,06 to complete repayment plan and get our home totally out of foreclosure...we can make pymts now ...its just this balloon pymt we need help with....we even tried to refi...the only problem was no sales comparable in our area in the last yr....familys live in our community for generations....i know thats a good thing unless you try to refi... thanks for any advice... we WANT to keep our home.....
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foreclosure and 401k
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cbg
I'm a Northern Girl
Federal law limits the circumstances under which you can take a hardship withdrawal from your 401k, and not all plans allow hardship withdrawals to begin with. If your plan does not have a provision for hardship withdrawals, then you're licked before you start - you can't get it out under any circumstances. The administrator has to follow the plan document, and the plan document has to follow the law. No provision = no withdrawal.
Assuming for the time being that your plan does allow for hardship withdrawals, then one of the very few reasons you can make a hardship withdrawal is to prevent eviction. I'm not positive about this and I will check it for you, but I believe you have to have already received an eviction notice before you can make this withdrawal. So it's not enough to say, well, if we don't make this payment we will get an eviction notice; you have to have the eviction notice in hand already. Again, I'll confirm that is true for you but it will be tomorrow at the earliest before I have such confirmation.
Again, I'll have to check whether this is law or our plan document, but I believe you have to have exhausted all possible loan provisions out of the plan.
Finally, it is likely that you will be barred from further participation in the plan for six months to a year after the withdrawal.
My boss knows more about 401k plans than anyone but an ERISA attorney but I won't have an opportunity to confirm these details with her until tomorrow morning. Hang tight.
Assuming for the time being that your plan does allow for hardship withdrawals, then one of the very few reasons you can make a hardship withdrawal is to prevent eviction. I'm not positive about this and I will check it for you, but I believe you have to have already received an eviction notice before you can make this withdrawal. So it's not enough to say, well, if we don't make this payment we will get an eviction notice; you have to have the eviction notice in hand already. Again, I'll confirm that is true for you but it will be tomorrow at the earliest before I have such confirmation.
Again, I'll have to check whether this is law or our plan document, but I believe you have to have exhausted all possible loan provisions out of the plan.
Finally, it is likely that you will be barred from further participation in the plan for six months to a year after the withdrawal.
My boss knows more about 401k plans than anyone but an ERISA attorney but I won't have an opportunity to confirm these details with her until tomorrow morning. Hang tight.
cbg
I'm a Northern Girl
If you already have a loan thru your 401k you will not be able to get another one. You also can not do any type of withdrawel on your money in your 401k while you have an outstanding loan.
Not necessarily true. Our plan allows for two loans. All loan possibilities have to have been exhausted before you can take a hardship withdrawal at all, so what would be the point of not allowing a hardship withdrawal if there is an outstanding loan?
That may be how your plan is written, but that's not correct across the board.
Not necessarily true. Our plan allows for two loans. All loan possibilities have to have been exhausted before you can take a hardship withdrawal at all, so what would be the point of not allowing a hardship withdrawal if there is an outstanding loan?
That may be how your plan is written, but that's not correct across the board.
thanks for the advice...if you have anything new i wll appreciate that also....i understand the reasoning and the need of 401k and other retirement plans but it just seems that commom sense in dollars and cents would tell the 401k group plans that people need their home to retire in and it would use much less of the funds to stop the evicton and or foreclosure before it gets to the courthouse steps....we have come a long way and we dont want to go backwards now.....
cbg
I'm a Northern Girl
Okay, I got a chance to run this past my boss late this afternoon. She confirmed thatunder the law (a) yes, you have to have been served with an eviction notice before you can take a hardship withdrawal for that reason; (b) you have to have exhausted all loan possibilities before you can take a hardship withdrawal and (c) you will be barred from participation in the plan for 6 months after the withdrawal - your plan document may dictate a longer time.
I understand why you would prefer to take it now rather than wait for the eviction notice but evidently, no matter how much more sensible it would be, that is not a legal option for you.
I understand why you would prefer to take it now rather than wait for the eviction notice but evidently, no matter how much more sensible it would be, that is not a legal option for you.