Q: Is there a way to waive the 10% fee for early withdrawal of a 401k due to personal injury resulting in job loss?
My husband was involved in a rear end collision that caused damage to his spine. He will soon lose his physically demanding job due to his injury. We need to withdraw from his 401k - would this situation exempt us from paying the 10% penalty for early withdrawal? Thank you!
A: A tax attorney or officer at your bank should be able to advise you on the tax aspects of such a withdrawal. But the more important question here is why you and your husband are contemplating the withdrawal. If your husband is represented by an attorney in this accident, it's possible that other options might exist to deal with the loss of income. It's possible they might not, but they are at least worth exploring. These could include looking into disability, or consulting with an employment attorney to review details of the imminent job loss. If your husband is not represented an attorney, you may want to think about consulting with an Indiana personal injury attorney to determine whether options other than a 410K withdrawal avail themselves. Good luck
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