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The MoneyTalks helpline gives you access to expert financial mentors via live chat, phone, email or text: .nz, 0800 345 123, or text 4029. But ideally you want to understand all the options and make a good choice. Often there are alternatives out there we don’t even know about, but because our KiwiSaver fund is ours, we turn there first. Get advice before you withdraw your KiwiSaver The response to the COVID-19 crisis includes all sorts of help you can look at before you need to apply for a hardship withdrawal. So it’s important to not run and do anything hasty. Tens of thousands of dollars could be at stake. Withdrawing now is a big deal, because you miss out on the money that would be yours if you stayed in KiwiSaver. But you want to make sure you exhaust all your other options first. “I’m dealing with redundancy, I’ve got people depending on me, I’m just trying to meet personal expenses – that’s what hardship withdrawals are meant to be for, right?”ĭefinitely. Withdrawing your KiwiSaver money has long-term effects But there are circumstances where you can access the money, such as applying under the significant financial hardship option. It’s not for withdrawing it whenever you want. KiwiSaver is there for long-term investing – to help you buy your first home or fund your retirement when you reach 65. Can you withdraw money from KiwiSaver early? It’s natural to think about tapping into your KiwiSaver.
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Attached are my financial statements, pay stubs, and loan responses.In financially stressful times like these, our minds quickly run to those piles of money in KiwiSaver. I appreciate your time and consideration with regards to my request. Please consider this a formal request for a. 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. 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. However, it is important to understand that your employer is under no obligation to allow your withdrawal. In fact, it is recommended to send it through registered mail, requesting a receipt as well. 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. What to Do After Sending the Hardship Letter These are all significant considerations to make. Additionally, you may not be allowed to add new funds to your 401k for a 12 month period as a result of your withdrawal. It will have a significant impact both on your income today and in the future. Furthermore, you will have to pay taxes on the withdrawal, and sometimes you will have to pay a penalty on it as well.Ĭlearly, withdrawing from a 401k should only be done in extreme situations. If your company has its own guidelines in place, they may be tougher than the federal criteria. There are significant legal issues to face, and deciding whether or not you will be allowed a withdrawal is complex. 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.
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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. If you are undergoing serious financial hardship, the Internal Revenue Service (IRS) does offer hardship withdrawal solutions. Normally, you are not allowed to take money out of a 401k, but some exceptions do exist.