Hi Jeff , Thanks for the comment I agree the db plan is on it's way out. Some seen to think a hybrid plan may be the solution. And agreeing with you again education is the big first step.

The statement is there but the IRS definition of a hardship does not exist. Being unemployed does not qualify as a hardship. being broke doesn't qualify. Very few waivers of 10% are actually accepted (disability being one, also to pay premiums on health insurance (IRA only) if collecting unemployment  12 weeks or longer, higher ed or first time home purchase.

A plan like a 401k or 457 may, but not requiired to offer specific hardship withdrawals. It must be specific as to what is considered "immediate and heavy". (www.irs.gov)

For example if you are 30 years old you are required to take the withdrawal for 29.5 years (to age 59.5). If you are 57 years old you are required to take the withdrawal for 5 years. Very tricky calculations and not for everyone- you need to talk to someone that understands theses thoroughly.

72(t) require you take a systematic stream of income from IRA. There are several ways to calculate the amount. You must take it out to age 59.5 or 5 years whichever is longer. Once you begin you cannot stop or it is considered a distribution. The strategies and calculatiions are tricky and you should contact an advisor who has had experience setting these up.

Disability waives IRA distributon penalty, but it must be on the level that qualifies for SS DI.

No exemption for being out of work

Part of the problem with 401k's is the responsibility of understanding them is with the employee. When questions come up they go to HR and speak to someone who probably understand as little as they do. While you are limited as to withdrawals from 401k's while employed, people tend to use the loan provision. They borrow from their account and have to pay it back at a certain interest rate over a period (5 years for most reasons, 10 for new home). The problems come with many can not pay back loan and make contributions so the contribution is dropped. Also if you leave employer you still are responsible for loan payment. Defaulting is the same as early distribution ( penalty and taxes). You cannot roll the loan from one employer to another or to an IRA.

A couple of points, if you leave your company you can roll your 401k plan or 457 plan to an IRA. If you need to create an income stream pre-591/2 look at and understand 72(t) distributions. You can take a systematic payout for 5 yrs or to age 591/2 whichever is longer. You will pay taxes on your withdrawals but not early penalties.This requires serious consideration and should be discussed with your CPA or financial adviser.

You can take money out of your IRA to pay for education puposes before 591/2 penalty free, not tax free. Make sure you have documentation to justify.

Roth 401k's are now being offered funded with after tax money and withdrawals are tax free.

Retirement accounts should be regarded as that, for retirement not something tapped or borrowed from. They carry benefits of tax defferral and the penalties are they to dicourage you from using them until time.

Hi Jeff,

Thanks for taking the time to read and comment. It sounds like you are doing a great job with your own planning. I agree 100% there is too much info and not enough education concerning financial ed. I think it should start early and continue through life.