My Employer Says I Cannot Remove 401(k) Money

If you have money in a 401k, you may try to access it at some point when you have an emergency. If you are still working for the employer that you have a 401k plan with, it can be difficult to gain access to the money. You may be able to access the money through a 401k loan or a hardship withdrawal.

401k Loan

One of the options that you may have is a 401k loan. With this type of loan, you can borrow up to 50 percent of the balance of your account. You would have to pay the money back with interest over a specific term. While 401k loans are common, they are not offered by every employer. Each employer gets to choose whether they want to offer 401k loans when they originally set up their 401k plan. If the employer decides not to offer these loans, there is nothing that you can do to get one.

Hardship Withdrawals

Another option that you may be able to take advantage of is a hardship withdrawal. The Internal Revenue Service allows retirement savers to take money out of their 401k in case of a serious financial hardship. For scenarios like paying for the final expenses of a loved one or keeping your house out of foreclosure, you can borrow money from your 401k. Just like the 401k loan, your employer also gets to choose whether they will allow hardship withdrawals. Many companies do allow these withdrawals, but you have to check with the rules of the plan to see if you can get one. When you take out a 401k hardship withdrawal, you have to pay a 10 percent penalty and pay taxes on the money.


Depending on the type of plan that you have, you may be able to roll your funds over into another qualified retirement account. For example, when you have money in a 401k, you might have the option to roll your money into an individual retirement account. The individual retirement account is a type of account that you set up on your own with a broker. If you need access to the money at that point, you can easily take it out of the IRA. You will still have to deal with the 10 percent penalty and paying taxes on the money.

Leaving Employer

If you are leaving your employer, you should be able to gain access to the majority of the money in your 401k. The only exception to this would be if you are not fully vested at the time of your departure. Most companies use a vesting schedule which gives you access to a larger percentage of company match money for every year of service. If you have not been with the company long, you may not get all of the money that your employer matched for you.