Getting money out of retirement fund early... Any advice?

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dmanson
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Getting money out of retirement fund early... Any advice?

Sorry if I'm in the wrong place on the forum, but just looking for exposure and didn't know the best spot.  Anyway, here goes.  I was told by Waddell and Reed, who runs the 403b at our company, that I cannot get my money at all.  I was hoping to just cash out and take the hit which I assumed was a 10% penalty plus everything I get to be taxed as income.

However, my rep said that I can't cash it out at all, even if I wanted to take the penalties.  Apparently, there are only a couple of ways to get your money early.  (I'm 37 so I need to wait almost 30 years to get to this and there is about $160,000 in it that I'd love to stack with).  I'm looking for help or advice from others who may have gotten their money out, how they did it, and/or if it is even legal to withhold this money.... I was smart enough to take out a loan for half of it and I bought PMs when Gold was about $1000 and Silver about $17.  I've since repaid it and now I just want my money and to not do this anymore.  

There are only a few ways that qualify to get it out and that's through a "hardship".  Rather than verbally going through it, I'm going to post the Hardship Withdrawal Application here so you can see the language.  Sorry if this is very long, but I think it's better than me trying to paraphrase it.  It's very interesting to me that they really want you to PROVE with evidence that you do have a hardship.  I had short sold some rental houses over the last couple of years so my credit is pretty bad, but I'm almost considering just not paying my mortgage so that I can then qualify because of the "save the house from foreclosure" clause.  Although I wonder if they'd make me send the money to my lender rather than give it to me. 

Anyway, don't call me crazy, I'm just trying to see if there is a way to get this money which is currently sitting in a moneymarket account because I'm terrified of this market.  (W&R does not offer any PM options of any kind.)  Any advice or comments is surely appreciated.  I wish I'd never put money into this thing in the first place.  I'm the poster child for ignorant.  Before the crash I had a big 403b and two rental houses and I thought I was living the dream.  If I had only stacked that money in PMs instead of all that crap, I'd be wealthy now... :(

APPLICATION FOR HARDSHIP WITHDRAWAL

As a Participant in the above mentioned plan, I hereby apply for a hardship withdrawal.  I confirm that the reason for the hardship is:

{  }        medical expenses incurred by me, my spouse or dependents (also attach proof required by the IRS upon Audit)

{  }        purchasing my principal residence (also attach proof required by the IRS upon Audit))

{  }        payment of tuition, related educational fees, and room and board expenses, for up to the next 12 months of post-secondary (after High School) education for the Employee, or the Employee's spouse, children, or dependents (also attach proof required by the IRS upon Audit)

{  }        preventing foreclosure on my principal residence or eviction from my principal residence (also attach proof required by the IRS upon Audit)

{  }        payments for burial or funeral expenses for the Employee's deceased parent, spouse, children or  dependents (also attach proof required by the IRS upon Audit)

{  }        expenses for the repair of damage to the Employee's principal residence that would qualify for the casualty deduction under Code section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income). (also attach proof required by the IRS upon Audit)
 

Having designated the reason for requesting a hardship distribution by checking one or more of the options above, I understand that I must now demonstrate that I have no other resources available to me to meet this hardship.  I can do this by meeting the criteria set forth below.

I agree that in order to receive the hardship distribution requested above:

  1. that the distribution will not be in excess of the immediate financial need ($_____________ [enter amount]);
  1. that I previously obtained all distribution and non-taxable loans available under all retirement plans maintained by the Employer;
  1. that I will not be able to make salary reduction and voluntary contributions for 6 months after I receive a hardship distribution; and

I understand that the Administrator will consider my request within a reasonable time, and I agree to provide any additional information which the Administrator may require.

                                                                                   _______________________________________­

                                                                                   Participant’s Signature

Sworn to and subscribed before me this ____________ day of ______________________, 20_______.

_____________________________________________

Plan Representative

Edited by admin on 11/08/2014 - 06:04
rowdyboy
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403b early withdrawal

dmanson, I would trust your plan administrator's statement on "no early withdrawal". Thats true with most qualified plans whether 401k or 403b. I assume you are still employed there, so you are out of luck on cashing out.

The exception as you mentioned, is the early withdrawal. I would not try to game the system. They make it difficult for a reason, and they will verify.

Congress has conducted hearings discussing proposals to require investors in qualified plans to convert a certain percentage in to government treasuries. 401k and 403b plans hold trillions of wealth, and uncle sam wants to convert a percentage of that to buy their debt. So if you think you have it bad now, you ain't seen nothing yet. I assume you stopped monthly contributions, so just keep stacking with that fiat.

Don't fret over past decisions, let it go. Move forward more wise and awake.

Harald
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Dmanson

Sounds like just getting another loan for half of your 401k is the way to go.  You don't want to have too much money sitting in your 401k anyway.  I'm 65 years old and am sitting on a reasonably sizable IRA that I rolled over from my 401K when I retired.  I'd love to cash it out but the tax hit would be a killer so I'm withdrawing some every year to keep taxes within reason.  There are trillions to dollars sitting in 401k's and IRA's and the criminals running our country would just love to get their hands on it, especially now that we're broke.  

That said, if you're willing to pay the taxes I would put in the hardship application...you never know.  When I was working , guys in their 30's were getting hardship withdrawals to buy cars and boats and other junk.    Maybe it depends on who is the plan administrator.

Harald
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I'm not being political when

I'm not being political when I say "criminals running the country."  There are many criminals in both parties.

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