Writing A Hardship Letter 401k Withdrawal

Normally, you are not allowed to take money out of a 401k, but some exceptions do exist. If you are undergoing serious financial hardship, the Internal Revenue Service (IRS) does offer hardship withdrawal solutions. However, to be considered, employers must also allow such a withdrawal, and you will need to write a hardship letter to prove your case as well.

Writing this type of letter is quite difficult. First of all, your employer will need to make sure that you qualify for a withdrawal under the IRS rules. Additionally, you have to be able to demonstrate that your financial hardship is not just something that is of a short-duration, but one that it is a very heavy burden for you.

It is very important that you write your letter properly. It has to be written in a formal style and there should be no grammatical or spelling errors in it. The recipient of the letter should be the person within your company who manages the retirement accounts. You must also make sure that you keep copies of any letters you send or receive. And do make sure that if you have any documents that prove your hardship, you should include (and copy) them as well.

Reasons for Qualification

Common qualification reasons include:

  • Medical expenses for self or dependent
  • Making a down payment on a primary home
  • Need to avoid eviction or foreclosure on a primary home
  • Expenses for education
  • Home repairs that are essential
  • Funeral expenses

What to Do If You Qualify

If you do qualify, you must then look at the hardship withdrawals that your employer offers and speak to your supervisor to find out to whom to address the hardship letter. There are significant legal issues to face, and deciding whether or not you will be allowed a withdrawal is complex. If your company has its own guidelines in place, they may be tougher than the federal criteria. Furthermore, you will have to pay taxes on the withdrawal, and sometimes you will have to pay a penalty on it as well.

Clearly, withdrawing from a 401k should only be done in extreme situations. It will have a significant impact both on your income today and in the future. Additionally, you may not be allowed to add new funds to your 401k for a 12 month period as a result of your withdrawal. These are all significant considerations to make.

What to Do After Sending the Hardship Letter

Once you have sent your hardship letter requesting a withdrawal, you should call them through the telephone after around one week to make sure that it has been received. In fact, it is recommended to send it through registered mail, requesting a receipt as well. However, it is important to understand that your employer is under no obligation to allow your withdrawal. Because the process is so long and complicated, it is important that you get the ball rolling as soon as you start to realize that financial difficulties may lay ahead. There is no way, in other words, that you will have a withdrawal in your account within just a few days, so it might even be too late to get you out of your hardship.

Hardship Letter 401k Withdrawal Examples

{Your Name}
{Your Address}
{Your Phone #}
{Your Account #}


To Whom It May Concern:

Please consider this a formal request for a {monetary amount} withdrawal from my 401K account due to financial hardship. At this time, I am facing {foreclosure, bankruptcy, eviction, educational termination, etc.} due to {disability, illness, medical bills not covered by insurance, etc.}.

If approved, the withdrawal will allow me to {pay my rent, afford daily expenses, stay in school, meet medical needs} for {amount of time}. This is an immediate and unbearable burden on me and my family. I have already attempted alternative options, such as {taking out a commercial loan, drawing from an IRA, etc.}, but unfortunately, {result}.

This withdrawal will save me from having to {drop out, foreclose, declare bankruptcy}. I appreciate your time and consideration with regards to my request. Attached are my financial statements, pay stubs, and loan responses.

Thank you,

{Sender Name}

Writing A Hardship Letter To Bank Of America

If you have a loan with the Bank of America and you find yourself in a situation of hardship, you could consider writing to them to ask for some sort of reprieve. It is very important, however, that you follow the accepted rules when it comes to these letters. This starts with identifying your hardship, and whether what you are experiencing counts.

What Is Hardship?

Hardship is a situation beyond your control that negatively affects your finances. For instance, the death of a family, a loss of a job, a sudden illness, a job relocation, divorce or separation, or an involuntary reduction in income, are all reasons for hardship. Generally speaking, this is also of a temporary nature.

Hardship letters are formal documents and must be treated as such. They should be properly addressed and written without grammar or spelling mistakes. The subject line should also include your account number. Furthermore, the letter should be short and to the point, focusing on facts rather than feelings.

How to Start Your Hardship Letter to Bank of America

Start your letter by explaining that you currently live in a property onto which a Bank of America mortgage has been secured. State that you have fallen behind on your payments, adding a specific date, and that you hope to come to a resolution. Explain that you are currently experiencing a situation of hardship and evidence this. Include copies of medical statements and bills, job changes, legal divorce proceedings, and so on. Again, make sure that you add the date of each of these happenings, so that the lender can create a timeline.

Make Your Proposal and Indicate How Long This Will Continue

You should then make an offer, which has to be one that you can afford. Do not make any promises that you will be unable to keep, as this will leave you in a much worse situation. Indicate exactly how much you are able to pay and from what date. You should also state any proactive steps you have already taken to lower your expenses, such as budgeting better and avoiding luxurious habits.

Finally, you should outline how long you expect the said situation to continue, and how you intend to repay the shortfall after the situation is resolved. Make it clear that you wish to remain in your property and ask whether there are any programs of the Bank of America that you may be eligible for. For instance, there is the Home Affordable Refinance program, the Home Affordable Modification program, and the Home Affordable Foreclosure program. Make sure that you indicate which one you are interested in.

Ending the Letter

End your letter by listing all your attachments. Those should, when put together, be a full financial statement of you and your current situation. If there is any other information that you believe may be useful, add it to the list as well. Finally, thank Bank of America for taking your letter into consideration and tell them that you await their response. Do keep copies of your letter and send it via registered post.

Hardship Letter To Bank Of America Example

{Account Number}
{Your Name}
{Contact Number}
Bank of America
ATTN: Home Loans


To Whom It May Concern:

I am writing with regard to my home at {address}, which has a mortgage owned by Bank of America. I have been behind on my mortgage payments since {date}, and I am writing to begin the process of resolving this situation.

I fell behind on my payments because {detail the reasons for hardship, including medical problems, death, job loss, etc.}, which occurred {date}.

I am unable to pay the monthly payments as is, but I believe I can afford {amount in dollars} per month, beginning {date}.

My home {is/is not} up for sale, and the property taxes and homeowner’s insurance {is/is not} current.

I know that Bank of America has programs such as Home Affordable Foreclosure, Home Affordable Modification, and Home Affordable Refinance. I am interested in {name of the program that suits your needs}.

I have attached my financial information, including a detailed account of my income, recent pay stubs, and {any other information they’ve asked for or you think is relevant}.

It is my hope that we can bring a swift and satisfying resolution to this problem as quickly as possible.

Please contact me at your earliest convenience.


{Sender Name}

Writing A Hardship Letter To Mortgage Company

A hardship letter is a very important piece of communication that you may need to write if you are in financial difficulty and want to have your loan modified. It is very important that you write the letter in an accurate and polite manner, which may be enough to convince your mortgage provider that you are worthy of a chance to keep your home. It is normal to feel intimidated because you have to tell an institution some personal things and you are not guaranteed that your request will be accepted. However, not writing the letter may mean that your property will be foreclosed upon.

Consider the Various Options that You Have

The first thing you have to do is consider every other option. This is firstly because those options are often easier to be accepted for than a loan modification and, secondly, because your lender will want to see that you have already been proactive in resolving the situation. If there really is no other option out there, you must contact your lender and inquire as to whom to address the hardship letter to and what the letter should include. It is possible, for instance, that they have forms that you have to fill in. Mortgage companies change hands quite often as well, which is another reason why you must call them first: the company you took your loan out with may not be the one that still holds your mortgage today.

Estimate How Much You Are Able to Pay at the Present Time

You should then calculate exactly what you can afford in regards to payments. What you should never do is write a letter that leaves any questions unanswered. Rather, you have to explain that you are in difficulty, why you are in such a situation, and what it means. You should then state which payments you have already missed (if any) and you believe you will still miss (if any), and why. You should then explain how you intend to pay for those missed or late payments later on and when.

Explain the Facts of Your Current Situation

Finally, you need to provide the facts as to why you are in your current situation. That this is factual is perhaps of the greatest importance. They do not want to know how hard it is on you emotionally, as that is already a given. Rather, they want to know what happened, why it happened, how long you expect it to last, and how you aim to fix it.

For example, if you were hospitalized and this caused you to miss several days of work, as well as having substantial medical bills, indicate that. You must also state when you intend to return to work, and when your income will return to normal. You have to explain, at that point, how you intend to get back to making your regular payments, and also how you aim to pay for the shortfall once you are back on track. You must show yourself as being apologetic, proactive, and willing to come to some sort of arrangement. While all of that will not guarantee that your lender will agree, such things will usually make it more likely.

Hardship Letter To Mortgage Company Example

{Your Name}
{Your Address}
{Your Phone #}
{Your Loan #}


To Whom It May Concern:

I am writing this letter to explain the reasons why I have {or will soon become} delinquent on my mortgage payments, and to request that we work together to avoid foreclosure on my home.

My income has become drastically reduced recently, due to {sickness, death in the family, job loss, etc. BE SPECIFIC}. The money I have remaining every month must go to {food, car payment, medication, etc.}. I have done everything in my power to keep up with the payments, but it unfortunately has become impossible {or will become impossible as of a certain date}.

I believe I can resolve my debt by {explanation of how you intend to pay them back OR a request that they provide a “workout” solution for your loan}.

Please understand that I know I signed a contract and that I am responsible for these payments. I am not attempting to shirk my responsibilities, but there is also only so much I can do when I still need to keep food on my table.

It is my intention to stay in my home, so I hope we can work out a solution as quickly as possible.

Thank you,

{Sender Name}

Writing A Hardship Letter Extended Leave

There are numerous types of hardship letters. Usually, they are requests for financial assistance, either in the provision of a grant, for instance, for funeral expenses; or a delay of taking payments, for example, with a loan or mortgage. However, another possible reason why you may write a hardship letter is if you want to request an extended leave.

When Do You Need an Extended Leave Hardship Letter?

When you are employed, you will be allocated a number of days of leave per year, which you can use at your personal discretion. A lot of employers also have other forms of leave in place, such as maternity leave and even paternity leave, time off for funerals, parental leave if a child is sick, and so on. Sometimes, a situation may occur in which you need more leaves, for a variety of reasons. Perhaps you have a relative who has developed a sudden but serious illness and requires care. Or you may have been declared bankrupt and are struggling to meet the responsibilities associated with that. These are all cases in which you may want to request an extended leave.

How to Write a Hardship Letter for Extended Leave

All hardship letters, regardless of purpose, should never be longer than one page. They should be short but to the point, in other words. They should also be honest and provide a clear and concise explanation of what is going on. Your letter has to be formal, explaining that you have unexpected hardship that requires you to request that extended leave.

Your letter should explain when you first started to experience difficulties, which is something that your employer should already be aware of. It should highlight what has caused an unexpected situation, such as illness, death in the family, disability, and so on. It should also explain that you have already used all your paid leave in accordance to corporate policy. Your letter should also indicate what would be the consequences if you are unable to be on leave, and why that would be so. Make sure that you also indicate the length of your extended leave.

Make sure that your letter also expresses your gratitude for working in your company. Showcase that you have been an excellent employee and that you feel committed to the organization. The letter should make it clear that you do not want to leave the company as a whole, but rather that you would prefer to have an extended leave. Be accommodating, however. Perhaps you could work a few hours during the week, even if it is to train a temporary replacement. More than anything, tell your employer that you intend to come back as soon as you possibly can.

Last but not least, place the ball in the court of your employer. Ask them to contact you with possible solutions to the dilemma, while making it clear that you would like to find a mutually agreeable solution. In doing so, you are demonstrating to your company that you are a committed employee.

Hardship Letter Extended Leave Example

{Your Name}
{Your Address}
{Your Phone #}


Dear {Mr./Ms. BossName}:

I would like to make a formal request to take an extended leave from my position as {position} here at {Company Name} on account of severe hardship.

As you may already know, as of {date} I have been struggling to accommodate the unforeseen impact of {disability, sick family member, death in the family, bankruptcy, illness, etc.}. I have taken all the paid leave I am able to take according to corporate policy, but if I don’t continue to {description of action taken while on leave}, it will result in {consequence}.

I love working at this company, and I have always made every effort to be a model employee. I feel that the work I do here is good and important and I don’t want to leave it. Instead, I am asking for extended leave until {date/further notice} so that I can {recover, care for a relative, etc.}. I can come in {part-time, a few days a week, etc.} to train a temporary replacement, but it is my hope to return to work as soon as I am able.

Please let me know if there is a way to work this out between us. Thank you for your time and your consideration in this matter.

Thank you,

{Sender Name}