Early withdrawals
One of the Plans' primary purposes is to provide benefits during retirement. However under certain circumstances, you may be able to withdraw from your account while you are still working.
When you take a withdrawal, in most cases, you take money out of your account permanently. Any withdrawal from your account may have income tax implications. A 10% early withdrawal tax may apply if you take a withdrawal prior to age 59 ½. If your withdrawal includes Roth assets, there may be additional tax liabilities if certain age and time requirements are not met. You may wish to obtain the advice of a tax advisor before you request a withdrawal.
If you choose to have your payment sent to you via check, a $2 fee is deducted from your account. There is no fee if you elect direct deposit. You may request a withdrawal or access the appropriate withdrawal forms by logging into your account and selecting Manage account. If you do not have an online account, or have any questions, contact the Savings Plus Solutions Center at (855) 616-4776. Our Customer Service Representatives are available Monday through Friday, 5 a.m. to 8 p.m. If you have a Personal Choice Retirement Account (PCRA), it may be necessary to transfer a portion of your PCRA funds into your core account to satisfy the amount of your withdrawal request and maintain the required minimum core account balance.
Types of withdrawals
Once you reach age 59 ½, you can take a withdrawal from any of your accounts for any reason. No supporting documentation is required.
If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty. You may wish to obtain the advice of a tax advisor before you request a withdrawal.
You can request a withdrawal online or by completing the Withdrawal Booklet.
You may qualify for an in-service withdrawal from your 401(k) Plan account due to a financial hardship for the following:
- Expenses incurred or funds needed for medical or dental care that would be deducted from your federal income taxes under Internal Revenue Code (IRC) Section 213(d), determined without regard to whether the expenses exceed 7.5% of adjusted gross income;
- Costs directly related to the purchase of a principal residence for yourself, excluding mortgage payments;
- Payment of tuition, related educational fees, and room and board expenses for up to the next 12 months of post- secondary education for you, your spouse, children, or dependents;
- Payments necessary to prevent eviction from your principal residence or to prevent foreclosure on the mortgage on that residence. NOTE: No more than two hardships will be approved for reasons of eviction within a 12-month period;
- Payments for burial or funeral expenses for your deceased parents, spouse, children, or dependents;
- Expenses for the repair of damage to your principal residence that would qualify as a casualty deduction from your federal income taxes under IRC Section 165, determined without regard to whether the loss exceeds 10% of adjusted gross income; or
- Expenses and losses (including loss of income) incurred by you on account of a disaster declared by the Federal Emergency Management Agency (FEMA) under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, Public Law 100-707, provided that your principal residence or principal place of employment at the time of the disaster was located in an area designated by FEMA for individual assistance with respect to the disaster.
A hardship withdrawal from your 401(k) account will have income tax implications. A 10% early withdrawal tax may apply if you take a withdrawal prior to age 59 ½. If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply. You may wish to obtain the advice of a tax advisor before you request a hardship withdrawal.
To qualify for a 401(k) hardship withdrawal, you must first exhaust all other resources reasonably available.
Withdrawals will be made proportionately (pro-rata) from your account, money sources, and your investment options unless you indicate otherwise on the Hardship Withdrawal Form.
To qualify for a 401(k) hardship withdrawal, you must:
You can request a Plan Hardship by completing and returning the 401(k) Plan Hardship Withdrawal form.
If you have rolled assets into the plan, you may take a withdrawal from your rollover contribution account without applying for a hardship withdrawal.
Qualified Birth or Adoption Distributions (QBAD) allow for penalty-free, in-service withdrawals up to $5,000 per individual within one year after birth or adoption of a qualifying child.
The maximum withdrawal for each parent is $5,000 for each birth or adoption from all California state-sponsored plans within a one-year period beginning on the date which the child was born or the legal adoption of the eligible adoptee was finalized. Any withdrawals will need to be coordinated with your 403(b) and other state-sponsored 401(k) plans, if applicable.
In order to meet the qualifications for a QBAD as defined under the SECURE Act, you must certify that:
- The withdrawal is being requested within a one-year period beginning on the date your child was born or the legal adoption of your eligible adoptee was finalized; and
- In cases of adoption, the eligible adoptee is:
- Not your spouse’s child from a prior relationship; and
- Under 18 years of age; or
- Considered mentally or physically incapable of self-support as defined by Internal Revenue Code section 72(m)(7).
You have the option to redeposit pre-tax funds into your account within three years of the withdrawal. Roth funds cannot be redeposited into your Savings Plus account. Amounts redeposited are treated as a rollover contribution and are not subject to the annual contribution limit.
Any withdrawal from your account may have income tax implications. A 10% early withdrawal tax may apply if you take a withdrawal prior to age 59 ½. If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply.
You may request a QBAD withdrawal by completing the Qualified Birth or Adoption Distribution Request form.
If you are on military leave for 180 days or more, you can take a withdrawal from your pre-tax contribution account with no tax penalty.
If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply. You may wish to obtain the advice of a tax advisor before you request a withdrawal.
Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) or 457(b) Plan maintained by the State of California.
To request a qualified reservist withdrawal, complete the Qualified Military Service Leave Withdrawal Booklet.
If you are on military leave for more than 30 days, you can take a withdrawal from your account.
Any withdrawal from your account may have income tax implications. A 10% early withdrawal tax may apply if you take a withdrawal prior to age 59 ½. If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal (1) is made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) is made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply.
Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) or 457(b) Plan maintained by the State of California.
To request a uniformed service withdrawal, complete the Qualified Military Service Leave Withdrawal Booklet.
If you have rolled assets into the plan, you can take a withdrawal from your rollover contribution account.
Any withdrawal from your account may have income tax implications. A 10% early withdrawal tax may apply if you take a withdrawal prior to age 59 ½. If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply.
You can request a withdrawal online or by completing the Withdrawal Booklet.
In certain situations, you can take an unforeseeable emergency withdrawal from your account.
An unforeseeable emergency is defined as a severe financial hardship to you, your spouse, or a dependent resulting from:
- A sudden and unexpected illness;
- An accident you or a dependent experienced;
- Loss of your property because of casualty; or
- Other similar extraordinary and unforeseen circumstances arising as a result of events beyond your control. For example: the imminent foreclosure of or eviction from your primary residence; the need to pay for medical expenses, including non-refundable deductibles or prescription drugs; or the need to pay for funeral expenses for your spouse or dependent.
You are not eligible for an unforeseeable emergency withdrawal, if the emergency can be relieved through: (1) reimbursement or compensation from insurance or otherwise; (2) liquidation of your assets, to the extent that would not itself cause severe financial hardship; or (3) stopping your deferrals to the plan.
You can request a Unforeseeable Emergency by completing and returning the Unforeseeable Emergency Withdrawal Booklet.
Withdrawals shall be made proportionately (pro-rata) from your account, money sources, and investment options unless you indicate otherwise on the Unforeseen Emergency Withdrawal Form.
If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply.
There is no tax penalty for this early withdrawal; however, the withdrawal will be taxed as ordinary income.
If you have rolled assets into the plan, you may take a withdrawal from your rollover contribution account without applying for an unforeseeable emergency. If the rollover contributions are from a money source other than the 457(b) Plan, the amount you receive may be subject to early withdrawal penalties.
If you are a current State of California employee, you may withdraw funds from your 457(b) account if your total balance does not exceed $5,000 and you meet all of the following requirements:
- You must not have any contributions into or out of your 457(b) Plan within the previous 2 years;
- You have not received a prior distribution from your 457(b) account under this provision;
- You do not have a freeze or hold on your account; and
- You do not have an active or a defaulted loan on your account.
You may request a voluntary in-service withdrawal online or by completing the 457(b) In-Service Withdrawal form.
If your withdrawal includes Roth assets, your withdrawal will be tax-free if the withdrawal is: (1) made five years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made; and (2) made on account of death, disability, or attainment of age 59 ½. A Roth withdrawal before requirements are met may result in taxation of your earnings and a 10% tax penalty may apply.
Neither Savings Plus nor its representatives offer tax or legal advice. For such questions, consult a tax or legal advisor.