401K Hardship Withdrawal with Merrill Lynch for Walmart Associates, Emergency Funds, Taxes, Fees, & Qualifications

Walmart is a multi national Retail corporation that offers its employees several benefits that can help them grow wealth over time. Some benefits include a 401k retirement plan that includes a Traditional, & Roth option. They also offer an Employee Sponsored Stock Plan (ESPP), Health Savings Account (HSA), Medical & Dental Coverage Options( Qualified Associates), & other benefits. As you save in the 401k plan you may eventually qualify for a 401k Loan or a hardship withdrawal.

A 401K Hardship Withdrawal allows workers to access retirement funds when they are going through difficult times, or simply need assistance to meet a goal. You must meet certain qualifications, and have an immediate Financial need to qualify for the hardship withdrawal. You must also have exerted all other options and payout options before qualifying for a hardship. There are taxes and fees associated with this option, and the money is taken directly from your 401k. A 401k loan may be a better option if you want to replace the money taken out of your 401k over time. Taking away from your 401k has many benefits, but it also has various disadvantages to its withdrawers.

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Taking your assets as a taxable cash distribution has some potential advantages including:

You have immediate access to your assets.

There are also several potential disadvantages to taking a taxable cash distribution including:

You lose the potential advantage of tax deferred compounding.

The distribution will be subject to federal income tax as well as any applicable state and/or local income tax.

If you are under age 59½, you may be subject to a 10% early withdrawal additional tax, unless an exception applies

20% of the distribution may be withheld at the time of distribution to comply with mandatory withholding rules.

How to qualify for a hardship distribution:

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There are two steps to determining if you qualify for a hardship withdrawal from the Walmart 401(k)Plan (the “Plan”).

First, you must have an immediate and heavy financial need in one of these categories:

1. Burial or funeral expenses.
2. Eviction/foreclosure.
3. Home repair expenses.
4. Purchase Principal Residence
5. Construction of Principal Residence
6. Post Secondary Tuition Expenses
7. Casualty Home Repair
8. FEMA Natural Disaster

Second, you must have received all currently available distributions (other than hardship distributions) and all available nontaxable loans from this Plan and all other plans maintained by Walmart or an affiliate.

There is also a separate non hardship option for Qualified Birth and Adoption (QBAD) for employees over 18, who may need assistance with the birth of a child or adoption of a minor.

Hardship withdrawals and your payroll contributions:

If your hardship withdrawal request is approved, the IRS imposes restrictions on certain benefits.

Specifically, for six months following your hardship withdrawal, the following restrictions apply:

- For hardship distributions taken prior to January 1, 2019, tax law requires a 6-month prohibition on salary deferrals after taking a hardship distribution.

- Effective for hardship distributions taken on or after January 1, 2019, tax laws will permit you to continue making contributions to the plan after taking a hardship withdrawal.

- You may not make contributions to the 401(k) Plan, any other qualified retirement plan or non-qualified retirement plan (like the Deferred Compensation Matching Plan). (Old Rules Prior to Jan 1, 2019)

- You may not make contributions to the Associate Stock Purchase Plan or any similar plan.

- You may not exercise stock options available to you through the Walmart Stock Incentive Plan or any similar plan.

Also, if you request a hardship withdrawal within five days of the record date of a dividend on the Walmart stock in your Plan account and you have the right to elect a cash distribution of the
dividend, tax laws require that the dividend be paid automatically to you in cash.

Once the suspension period related to hardship withdrawal is over, you can enroll again in the 401(k) Plan or the Associate Stock Purchase Plan with an online benefits enrollment session on
walmartbenefits.com or the WIRE.

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