401(k) hardship withdrawal rules

The seven reasons that qualify automatically

Most plans use the IRS safe-harbor list in the 401(k) regulations. If your need is on it, it counts as immediate and heavy:

1. Medical care for you, your spouse, dependents or primary beneficiary
2. Costs directly tied to buying your principal residence (not mortgage payments)
3. Tuition, fees, and room and board for the next 12 months of college or other post-secondary education
4. Payments to prevent eviction from your home or foreclosure on its mortgage
5. Funeral or burial costs for a parent, spouse, child, dependent or primary beneficiary
6. Repairs to your home after a casualty such as a fire or storm
7. Expenses and lost income from a FEMA-declared disaster, if you lived or worked in the designated area

Credit card debt, a car payment and back taxes aren’t on the list. Some plans accept other needs on a facts-and-circumstances basis; many don’t.

You can only take what the need requires, but that amount can include the income tax and the 10% additional tax you expect to owe on the withdrawal itself. You’ll also be asked to state that you don’t have other cash reasonably available to cover it.

What it really costs

The withdrawal is income for the year. If you’re under 59½, add the 10% additional tax. So to end up with $10,000 in hand in the 22% federal bracket with a 5% state tax, you need to take out about $15,873:

	Amount
Withdrawal	$15,873
Federal income tax at 22%	$3,492
State income tax at 5%	$794
10% additional tax	$1,587
Cash you keep	$10,000

The bigger cost shows up later. That $15,873 never goes back in. At 6% a year, money taken out at 40 would have grown to about $68,000 by 65. The comparison tool runs this for your age and bracket next to a loan, a personal loan and a HELOC.

Hardship withdrawal vs. 401(k) loan

	Hardship withdrawal	401(k) loan
Paid back?	Never. Can’t be repaid or rolled over	Yes, by payroll deduction
Income tax	Yes, on the full amount	No, unless you default or leave and don’t repay
10% additional tax	Yes, under 59½ unless an exception applies	Only if it becomes a distribution
Needs a qualifying reason	Yes	No
Effect on your account	Permanent	Temporary, if repaid
Risk if you leave your job	None	Unpaid balance can become taxable

A loan is usually cheaper when you can afford the payment and expect to stay at the job. A hardship withdrawal makes more sense when you can’t take on a payment at all, or you already have a loan out and are at your limit.

Smaller options worth checking first

Two laws added withdrawals that skip the 10% additional tax in specific situations: the SECURE Act of 2019 (birth or adoption) and the SECURE 2.0 Act of 2022 (the rest below). Your plan generally has to offer them, and income tax still applies:

• Emergency personal expense: up to $1,000 once per calendar year, self-certified. If you don’t pay it back within three years, you can’t take another during that time.
• Domestic abuse: up to $10,500 in 2026, or half your vested balance if less, within a year of the abuse.
• Birth or adoption: up to $5,000 per child, repayable within three years.
• Terminal illness, certified by a physician.

See the full list of exceptions on the early withdrawal penalty page.