Participants in 401(k) savings plans are permitted to withdraw some or all of their balance if they meet requirements related to age, ability to work or financial hardship. According to the IRS, administrators of 401(k) plans are generally obligated to obtain consent from plan participants, and sometimes their spouses, before withdrawals may be made.Continue Reading
In general, a plan participant is allowed to withdraw money from a 401(k) if any of the following is true: the participant is at least 59.5 years old, the plan is terminated without a successor plan established by the employer or the participant dies, becomes disabled or is otherwise cut off from future employment. According to the IRS, plan administrators must take the balance of the 401(k) into account before authorizing a payment.
Generally, if the 401(k) has more than $5,000 deposited in it, specific consent must be obtained from the participant before disbursement is made. For certain types of payment plans and benefit arrangements, the plan's administrators must also obtain consent from the participant's spouse before proceeding with the withdrawal. Distribution is required before April 1 of the calendar year in which the participant either retires or reaches the age of 70.5 years, whichever comes first, explains the IRS.Learn more about Financial Planning