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Congress Raises 401(k) Hardship Withdrawal Limits

401(k) Harship Withdrawal

Restrictions on employee 401(k) hardship withdrawals will be eased next year, thanks to new legislation enacted by Congress in February 2018.

Most 401(k) plans¬†permit hardship withdrawals, though plan sponsors aren’t required to allow them. As it stands today, employees seeking to take money out of their 401(k) accounts are limited to the funds they contributed to the accounts themselves, and only after they’ve first taken a loan from the same account. Loans must be repaid, of course. The theory behind the loan requirement is that employees would be less apt to permanently deplete their 401(k) accounts with hardship withdrawals. Read more