Spouse death results in hardship

[Guest jdstar]

My husband & I worked for the same company and participated in the 401k program. He died July 2006 and I was laid off in April 2007 at age 50. I have no income now and need money for my house payment. Can I withdraw my husbands 401k money to make house/living payments until I find work again without taxes or penalties? Am very scared and getting a bit desperate. His 401 has enough to sustain me for at least another year or so if needed. I am the sole beneficiary and personal representative of the estate. Any help is greatly appreciated as I do not know where to turn or where to look for this information. Thank you all.

[Bird]

If your husband's account is still in his name, you can probably take some or all of it directly as a death distribution (hardship is not needed). Whether you can take a partial distribution now or you have to take it all at once is up to the terms of the plan. There are no early distribution penalties for a distribution on account of the participant's death, but distributions are generally going to be subject to ordinary income taxation. You could roll over his money to your own account or to an IRA, but you probably don't want to do that if you're going to need it, because if you roll it over and then take it from your own account before age 59 1/2 it WILL be subject to the early distribution penalty (10%).

Having said all that, if you already rolled it over to your own account, then you might be entitled to a distribution from your account on account of hardship, or maybe on account of your termination of employment.

You're really going to have to talk to the plan administrator (likely the employer) about when and how you can take your money.

Good luck. I may have tried to say too much, or not enough, so if anything is unclear feel free to write back.