I’m disabled and need financial help – how can I borrow on future settlement and/or 401k payout?
I’ve been disabled since Sept. and now it looks like I won’t be getting better. I have a worker’s comp case in the works, but that will take a while, and the disability doesn’t pay nearly enough to cover bills. I can cash out my 401k in May. Is there any way to borrow money against the 401k or the worker’s comp settlement now? If not, where can I turn for help? I just need enough for the moving vans to get me out of here and into a cheaper place, and to live until May, so I can deed the house back to the bank and move somewhere less expensive than Los Angeles.
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There are several places that do lump sum payments on your future benefits but in order to do so they take a percentage of your money. That is not a smart thing to do but if you have no other choice then what can you do. You can borrow on your 401 K from the financial institutuion it is in. They can offer you an early payout amount if you just want to cash it all the way out. Good Luck!
If you are no longer working, you cannot get a loan on your 401k, because it is a federal requirement that 401k loans be paid back through payroll withholding. You might be able to expedite payment from your 401k plan if it permits hardship withdrawals. By law, a 401k plan cannot be used as collateral for a loan, except a loan from the Plan itself. I do not know anything about worker’s comp. Sorry I do not have better news for you. Good luck.
There is no guarnatee that the workmens comp case will be settled anytime soon and no one knows the amount of any settlement at this time. Once you terminate you can take 401(k) money with penalty if younger than 591/2. This is not typically a wise move however.
If you’re considered disabled by SSI then you can take a 401k distributions without the 10% penalty. simply apply for a distribution….You can’t borrow on it though as you aren’t employed by the company.
Check with the financial services holding the 401K, you CAN make
medical/disability withdrawals from the 401K. You CANNOT use the
potential WC settlement as collerateral for a loan in Calif. It is
illegal for anyone to loan you money against the award, or for you
to encumber the award in any way. If you have an attorney, she/he
can loan you money or advance cash against a potential WC award…
but that’s between you and your attorney.