Irs 401k Limits 2024 And Hardship Withdrawals. A hardship distribution is a withdrawal from a participant’s elective deferral account made because of an immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need. There are several circumstances when current employees can take 401(k) withdrawals, but you’ll need to meet certain criteria to avoid penalties when withdrawing.

As the name implies, 401(k) hardship withdrawals are designed to let participants withdraw money from their retirement plans if they’re facing certain financial. A hardship distribution is a withdrawal from a participant’s elective deferral account made because of an immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need.