The funds you stash in your 401(k) plan are intended for your future retirement. But sometimes life throws you a curveball, and you need money fast. In those cases, you may be able to tap into your 401(k) through a hardship withdrawal.

Increasingly, Americans are turning to this option when they are in a pinch. In 2024, a "record 4.8% of workers in 401(k) plans took a hardship distribution for financial emergencies, up from a prepandemic average of about 2%," said The Wall Street Journal , citing Vanguard Group. But just because the money is there, does not necessarily mean that it is a good idea to take it.

How do 401(k) hardship withdrawals work?

A hardship withdrawal allows you to take money out of your 401(k) plan specifically to cover a dire financial need. This is not to b

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