Financial Hardship Letters

Writing A Hardship Letter For Retirement Withdrawal

Written by Frederick Schmitt

It is incredibly rare to be allowed to withdraw funds from a retirement account. If it is allowed at all, it is heavily taxed and various other terms and conditions are attached. For instance, you will not be allowed to add new funds to the retirement account for a certain period of time, which is usually 12 months. Most of all, you must be able to demonstrate financial hardship. Nobody ever expects to be in such a situation, but it can have dire consequences on your life and your dependents. Hence, in some cases, consideration may be given.

Specifics of Writing the Hardship Letter

If you do have to write a hardship letter, then you must make sure that you write it correctly. This means that it is written in good English, and is free from spelling and grammatical mistakes. Additionally, you must provide all the necessary information that the company is looking for. This includes your name and address and your account number. You also have to be detailed, telling them exactly how much you want to withdraw, where from, and why.

Indicate that You Are Aware of the Consequences

It is of extreme importance that you make it clear that you are aware of the fact that being allowed to withdraw money from a retirement account is very rare. You should also indicate that you understand that by withdrawing an amount before the expected closing date, you may have to pay a variety of fees, which include early withdrawal fees and taxes.

Describe Your Financial Situation Properly

Naturally, you also have to provide a proper description of your situation. You must be completely open and honest about this, but don’t relate a sob story. Rather, you have to be clear about what has happened, and most of all, clear about what would happen should you not be allowed to withdraw from your retirement account. For instance, you may have to declare bankruptcy, lose your car, find yourself unable to pay for your medical bills, face foreclosure, or be unable to pay for funeral expenses.

Finalizing the Letter and What to Do After Sending It

The final thing you have to add in your letter is an explanation of how you aim to recover from your hardship. In all cases, consideration will only be given if the situation you are in is of a temporary nature. If your situation is such that even with the withdrawal, you will simply be postponing the inevitable, then it is unlikely that it will be accepted.

You should also add any necessary paperwork to your withdrawal request. These should include copies of your retirement account, and also copies of the expenses you have to face, the reason for your hardship (for instance a letter of redundancy), and any other documented evidence that you may have. Do make sure that you keep photocopies of everything that you send, and do send the letter via registered mail, requesting a receipt, if possible. Last but not least, you should regularly contact your retirement fund to determine whether the letter has been received and the status of your request.

Hardship Letter For Retirement Withdrawal Example

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

{Date}

To Whom It May Concern:

My name is {Name} and I have an account with you under Account {Number}. I am writing to request a withdrawal of {monetary amount} from my {Name} account due to extreme hardship.

I understand that by withdrawing money from my 401K before {year}, I am subject to early withdrawal fees in the amount of {monetary amount}. However, I was faced with sudden and unexpected hardship on {date} when {I lost my job/was injured/had a family member die/etc.}. I am now in danger of {foreclosure/crushing medical bills/losing my car/going bankrupt}.

I have attached the necessary paperwork to this letter, documenting my necessary expenses and how the withdrawal will meet these charges.

Please grant me the {amount} so that I can recover from this temporary hardship. Thank you for your consideration and any help you can provide.

Sincerely,

{Sender Name}

About the author

Frederick Schmitt

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