How do I take out money due to hardship?
For a Participant with a financial hardship, with no other resources to relieve the hardship, including securing a loan from this 403(b) Retirement Plan, he or she may request a hardship Distribution from the plan if it is for one of the following reasons:
- Un-reimbursed medical expenses for the participant, the participant's spouse or dependents
- Purchase of the participant's principal residence
- Payment of college tuition and related educational costs such as room and board for the next 12 months for the participant, the participant's spouse, dependents, or children who are no longer dependents
- Payments necessary to prevent eviction of the participant from his/her home, or foreclosure on the mortgage of the participant's principal residence
- For funeral expenses
- Certain expenses for the repair of damage to the participant's principal residence
Important Note: Your Plan Sponsor will require documentation from the you which clearly indicates that the Distribution is needed to pay one or more of the qualifying expenses listed above. Distributions are subject to regular income taxes and, if you are under age 59½, a 10% early Distribution tax. In addition, the participant's 403(b) and/or Roth deferrals to the plan must be suspended for six (6) months. For these reasons, it is very important that you consider all other remedies for the financial hardship before taking a hardship Distribution from your retirement plan.
The amount eligible for hardship Distribution is limited to the amount you have contributed to the plan in the form of 403(b) pre-tax deferrals or Roth deferrals, excluding any investment earnings on the account as well as any employer contributions. This amount is reduced by any previous Distributions from the account.
Once it has been determined that you have a qualifying financial hardship, with no other resources to resolve the hardship, including securing a plan loan, please follow the steps below:
Follow these instructions to request a hardship withdrawal from your 403(b) Plan.
Step 1: Obtain the Forms
Request the Hardship Distribution Request Form from your employer or from the Envoy Financial Service Team.
Step 2: Complete the Authorization Form and Obtain Spousal Consent
Complete and sign the Hardship Distribution Authorization Form. Instructions for completion are provided in Section 1 of the form. If you are married, your spouse must also sign the form. Return the completed form to your Plan Sponsor.
Your Plan Sponsor will verify that the Partial Distribution Authorization Form is properly signed by both you and your spouse (if applicable) and forward the form to Envoy for processing.
Step 3: Payment
Once the form is submitted for processing, you should receive a check within two weeks for the amount of the request, less 20% federal withholding. A distribution fee will be deducted from your account prior to the distribution.
Step 4: Tax Reporting
A Form 1099-R will be mailed to you within two weeks of the distribution. The partial distribution is typically a taxable event.
Important Note: Withdrawals are subject to regular income taxes and, if you are under age 59½, a 10% early withdrawal tax. In addition, your Pre-tax and/or Roth deferrals to the plan will be suspended for six (6) months. For these reasons, it is very important that you consider all other remedies for your financial hardship before taking a hardship withdrawal from the plan.