Anyway to undo a hardship withdrawal?
If someone takes a hardship withdrawal from a 401(k) plan and ends up not needing the funds, is there a way to undo the transaction? Does it matter, if the participant is older than 59 1/2?
If someone takes a hardship withdrawal from a 401(k) plan and ends up not needing the funds, is there a way to undo the transaction? Does it matter, if the participant is older than 59 1/2?
Permalink Submitted by Alan Spross on Wed, 2009-12-09 04:24
About the only option here would be convincing the plan that the withdrawal was in error. Perhaps if the employee presented an invalid reason under the plan guidelines, the plan would accept the amount back. But since a hardship distribution is NOT eligible for rollover, that option is not available. There is no early withdrawal penalty if the distribution is issued after age 59.5. Perhaps the distribution can be used to fund an IRA contribution since the employee has earned income for the year.