MMC Benefits Handbook
Taxes on Financial Hardship Withdrawals
The taxable portion of your financial hardship withdrawal is subject to tax withholding at a rate of 10% unless you elect another amount or no withholding. Financial hardship withdrawals cannot be rolled over to another employer's tax-qualified plan or IRA.
Also, taxable distributions may be subject to an additional 10% Federal early withdrawal tax unless you:
- receive the distribution on or after you reach age 59-1/2, or
- use the distribution for a tax deductible medical expense, or
- are disabled (as defined by the Internal Revenue Code).
You should consult with a tax professional to find out exactly what taxes you will have to pay.