A distribution from a retirement savings plan, such as a 401(k), granted when an individual demonstrates an immediate and heavy financial need, can sometimes be accessed during a marital dissolution. This access is subject to specific Internal Revenue Service (IRS) regulations and plan provisions. For example, an individual facing eviction due to financial strain resulting from separation proceedings might seek to access these funds.
The ability to access retirement funds in such circumstances can provide a critical financial lifeline during a turbulent period. It offers a potential solution when other sources of funds are unavailable. Understanding the criteria and potential tax implications is vital before making such a decision. Previously, mandatory waiting periods and contribution suspensions often accompanied such withdrawals, but recent legislative changes have provided some relief.
