Hardship Withdrawals
Access your money when you need it most
What will you do if an unforeseen financial burden arises? RPB allows you to withdraw money from your retirement account as a hardship withdrawal in the event that you encounter an immediate and heavy financial need and you’re not yet retired.
This type of withdrawal may be able to help if you find yourself unable to pay for expenses related to medical costs, home costs, educational costs, or burial or funeral expenses. It might even cover such costs for your spouse, dependents, or beneficiaries.
Important considerations
Keep in mind that a hardship withdrawal may have a sizable impact on your retirement savings. The withdrawal will be considered taxable income and will likely be subject to an additional 10% penalty if you're under the age of 59½. You also aren't allowed to pay back a hardship distribution, unlike a loan.
These limitations could hinder the compounding growth of your retirement savings, and ultimately impact your retirement goals. That’s why we urge you to carefully consider all of your options in the event of a financial emergency.
Eligibility, restrictions, and other details
If you’re considering a hardship withdrawal, make sure you understand the details of this type of distribution.
Hardship withdrawals can only be taken from 403(b) accounts, not Rabbi Trust accounts.
You can take out a hardship withdrawal to cover costs for yourself or your spouse, dependents, or beneficiaries.
We follow IRS guidelines and define a hardship as an immediate and heavy financial need. This can include:
- Certain medical expenses
- Costs relating to buying a principal residence
- Tuition and/or related educational fees and expenses
- Payments necessary to prevent eviction from—or foreclosure on—a principal residence
- Burial or funeral expenses
- Certain expenses to repair damage to your principal residence
You can only withdraw enough money to satisfy the financial need, plus any additional money to pay any applicable taxes or penalties that are incurred because of the distribution. The maximum distribution is limited to 75% of your account balance.
Unlike a loan, the money you withdraw cannot be repaid to the plan, and cannot be rolled over into another employer-sponsored retirement plan or IRA account.
Your hardship distribution is subject to income taxes (unless your withdrawal is coming from Roth contributions), and may also be subject to a 10% additional tax on early distributions.
You may not be able to take a hardship withdrawal if you have other financial resources such as assets owned by your spouse or minor dependents (for example, a vacation home owned by you and/or your spouse).
Note: Property held for your child under an irrevocable trust or under the Uniform Gifts to Minors Act is not considered a resource.
You must provide verification of your hardship, such as a tuition bill, purchase agreement, medical bill or other documentation. This is required to show that you cannot cover your costs by using insurance, liquidating assets, pausing or stopping elective retirement contributions, taking out other available distributions, or borrowing from commercial sources.
How to request a hardship withdrawal
Consider taking a loan instead.
Look into taking a loan before requesting a hardship withdrawal. You don't have to pay taxes or penalties when you take a loan. Plus, the loan payments and interest go back into your account.
Make sure you know the rules.
Visit Withdrawals/Loans in NetBenefits and click the Hardship Withdrawal option to learn about the hardship withdrawal rules.
Make your request.
In NetBenefits, submit the online form with the required documentation. If you have questions, call Fidelity at 800.343.0860.
Protect your legacy today.
It's important to keep your beneficiaries up to date to ensure that your wishes are followed after you're gone.