TWO questions

[Catherine]

Two different clients, two questions.

1. Loan documents on refi note 0.25% paid as points at closing (not rolled into loan). Nothing on 1098 in the "points" box from that lender. Can I assume that closing documents are more likely to be accurate than the 1098?

2. Another client had her apartment's building burn down. She wants to know if there is a hardship withdrawal from 401k for this type of loss, and I can't find one - she escaped relatively unscathed; it's just all her stuff that's gone. Anyone out here know of something I'm missing? I know about casualty loss rules -- but she wants $$ in hand, not a deduction (although that will help too).

Thanks as usual.

Catherine

[Gail in Virginia]

Shooting from the hip, Catherine, I think that mortgage companies only report points on original mortgage, not on refinances because the points on a refinance have to be amortized over the life of the loan.

Also, a hardship withdrawal from a 401(k) should be defined within the plan documents and refers to the ability to withdraw the money without a separation from service. It will still be subject to taxation and penalties for premature distribution even if the plan document has a provision allowing her to make the withdrawal as a hardship.

Someone else might be more knowledgeable, but this is my opinion for what it is worth. :dunno:

[Tax Prep by Deb]

Also, a hardship withdrawal from a 401(k) should be defined within the plan documents and refers to the ability to withdraw the money without a separation from service. It will still be subject to taxation and penalties for premature distribution even if the plan document has a provision allowing her to make the withdrawal as a hardship.

Someone else might be more knowledgeable, but this is my opinion for what it is worth.

From what I have read you are correct. The hardship withdrawal from a 401 (k) is from within the plan. There are very few exceptions to the penalty on the withdrawl, hardship is not one of them at least wise I haven't been able to find it.

Deb!

[Catherine]

From what I have read you are correct. The hardship withdrawal from a 401 (k) is from within the plan. There are very few exceptions to the penalty on the withdrawl, hardship is not one of them at least wise I haven't been able to find it.

Deb!

Thanks Deb & Gail -- it's what I'd figured but before responding I thought it would be good to check with others.

[joanmcq]

Hardship is not an exception to the penalty for early withdrawal. and points on a refi are never on the 1098.