Taking Hardship Withdrawals From Retirement Plans

Do you have a 401k or 403b retirement plan at work?

seniorsIf you do, then you may be able to take out a loan from your retirement plan or make a hardship withdrawal. Plans are not required to offer either option, but offer one or both:

  • Loans: these are temporary withdrawals that must be paid back within five years, with interest. If not paid back within five years, it is treated as a distribution and if the participant is not at least 59.5 years old, then they must pay a 10% penalty on top of income taxes on the withdrawn funds.
  • Hardship withdrawals: these are withdrawals made for specific hardship reasons. The amount withdrawn is subject to income tax and if the participant is not at least 59.5 years old, then they must pay a 10% withdrawal penalty. The amount withdrawn may not exceed the amount needed to satisfy the hardship. For example if you have a $10,000 medical bill you need to pay, you cannot take out more than $10,000.

You may be required to first take a loan before taking a hardship withdrawal.

Current rules

The IRS allows an employee to withdraw money from their employer-sponsored 401k or 403b plan:

  1. To pay for unreimbursed medical expenses for plan participants or their spouses or dependents
  2. To purchase the plan participant’s principal residence, excluding mortgage payments
  3. To pay college tuition and related post-secondary education cots such as room and board for the next 12 months for a plan participant, spouse, depend or child who is no longer a dependent
  4. To make payments to prevent eviction or foreclosure on a mortgage of a principle residence
  5. To pay funeral expenses for plan participants and their spouse, children, dependents, or beneficiary
  6. To pay for repairs to a plan participant’s principal residence if the repairs fall under the IRS’s definition of casualty loss.

For more information: www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions

There is also a requirement that when you make a withdrawal, you have to wait to make any contributions to your retirement plan for six months.  So that means if your employer matches any money that you contribute to your plan each paycheck, then you are not only missing out on the tax benefits of your contributions, but you are also missing out on the money that your employer would have matched!

New rules

Under the latest budget law passed on February 9, 2018, it is now easier to make a hardship withdrawal from employer-sponsored retirement plans.

Beginning in 2019, employees:

  • who make hardship withdrawals are no longer required to stop making contributions to the plan for six months, which allows employees to keep benefitting from an employer match.
  • cannot be required to first take a loan from their plan before making a hardship withdrawal
  • can now withdraw the plan sponsor’s qualified nonelective contributions, qualified matching contributions, and profit-sharing contributions

Taking loans or hardship withdrawals from retirement plans may be useful way for people diagnosed with cancer to find some financial relief. However, it is important to understand how the rules apply to you and to speak with a financial planner or an accountant before making any financial decisions.

How Networking Can Be Your Super Power

Terri Wingham, Founder & Executive Director of A Fresh Chapter, is back to talk about the power of “networking” and what that even means!

Triage Cancer: The Power of NetworkingNetworking is often a loaded word. As defined by Merriam-Webster, “Networking is the exchange of information or services among individuals, groups, or institutions; specifically : the cultivation of productive relationships for employment or business.” 

Perhaps the idea of networking creates a vision of a smarmy salesperson with slicked back hair and a business card holder holstered to his hip? But, what if you could flip this concept on its head and use it as your secret weapon to exploring new opportunities in your life?

Prior to a breast cancer diagnosis in 2009, I was a Professional Recruiter – aka “Headhunter” in the technology industry in Vancouver. I managed a network of over 300 people and placed top level Project Managers, Business Analysts, and even CIOs into jobs within Vancouver. It was a sink or swim business and in order to be successful, I had to learn quickly to get over my fear of networking.

I had to create a new definition: Networking: the willingness to connect with new people for the purpose of better understanding their stories and helping them achieve their goals, while also finding mutually beneficial ways to work together.

When defined this way, I learned to approach new relationships in terms of what I could give rather than what I would get. However, in the beautifully karmic way of the universe, by focusing on helping others, it would always boomerang back to help me.

When treatment ended in 2011, I decided not to return to my recruiting roots and to, instead, embark on A Fresh Chapter in my life. Inspired by a volunteer trip to South Africa, I wanted to help other people impacted by cancer start fresh through volunteering and meaningful travel. The skills I learned in building a network have helped me transform an audacious dream into a sustainable reality.

How Can Networking Help You?

Networking can be applied to dating, travel, volunteering and so many other elements of your life, but today I want to focus on networking as a way to help you move forward with your career. Here are a few steps that have worked for me:

Step 1: Clarify your vision. As you prepare to meet new people, it’s important to be able to articulate your current state and your end goal. Where are you in your life and where are you hoping to go? Do you hope to better understand a new industry to see if it might be a fit for you? Do you know the exact type of job you want and just need to figure out how to get there?

Step 2: Brainstorm a list of the kind of people you’d like to meet. Are you looking to connect with hiring managers? Other people who work in a specific industry? Mentors from other industries who might be able to give you advice on how to approach a career shift or how to start building your career?

Step 3: Know “your ask” in case you have the opportunity to share it. Although you will be focusing on the people you meet more than on yourself, it’s important to know what it is that would help you get closer to your vision, in case someone offers to help. Is it an informational interview in a new industry? An introduction to someone in a specific company? Your ask will likely change depending on who you’re talking to and there will be some people with whom you don’t get to the ask until the third or fourth conversation.

Step 4: Practice with people you know. It can be unnerving to meet a stranger for coffee. So, start with the people already in your circle. Everyone has a network of friends, former colleagues, classmates, or sports teammates, etc. You don’t have to overcomplicate the invitation. It could be something as simple as, “Jo – I’d love to catch up over coffee and hear how you’re doing. It’s been too long.” That person doesn’t need to know that you’re practicing your networking skills, but it will get you out in the world and engaging with the network you already have.

Step 5: Be inquisitive. People love to talk about themselves. If you’re feeling nervous about talking about you, simply get them talking and pay attention to what they say. Are they talking about a challenge in their life that you might be able to relate to or you might know someone who could help them? Sincerely listen to them and they will feel connected to you. One of the best lessons in my life came from Dale Carnegie’s book, “How To Win Friends and Influence People”. “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.”

Step 6: Ask for advice. As humans, we are wired to help. When the conversation does turn to you, don’t be afraid to ask for insight. “Actually, I’m thinking about making a change. I’m hoping to talk to people who know more about the ___________ industry. Any chance you have advice on where to start or any ideas of someone I should connect with?” Meeting strangers is as simple as an introduction from a friend. This is how you move from connecting with old friends to meeting new ones.

Step 7: Always, always follow up. Depending on the person, send an email or even better – write a handwritten card thanking the person for his or her time and mentioning something specific about them from your conversation. If you can think of a way to help them, follow through with that. They will remember you and want to return the favor one day.

When we switch our mindset to one of giving instead of getting, it takes the pressure off and helps us realize that networking is not about selling anything. It’s about connecting. As your network grows, you’ll find yourself in the wonderful position of being able to help make connections for other people. Somewhere along the way, an introduction to the right person at the right time will put you on the path to a brand new chapter in your life.

About Terri: Following treatment for breast cancer, Terri found herself grappling with unexpected feelings of isolation, fear of recurrence, survivor guilt, depression, and anger. Searching for something that would inspire her again, she signed up for a volunteer trip to Africa and the dream for A Fresh Chapter was born.

New job? Where will you sit?

CAC Logo Updated 2015by Joanna Morales, Esq.

Thinking about a career change? Looking for a new job? Wanting to get back into the workforce?

Then Cancer and Careers is a resource for you. In addition to providing all sorts of information about how to balance work and a cancer diagnosis, they provide a free resume review service, a free job coaching services and free educational events.

For example, Cancer and Careers hosts a free, annual National Conference on Work and Cancer in New York on June 12th. They do offer travel scholarships – the deadline is April 15th! For you west-coasters, they are also bringing a regional conference to LA on November 13th – stay tuned . . .

In the meantime, here is an interesting list of the 10 questions that you should ask before you accept a job offer: https://www.themuse.com/advice/10-questions-you-absolutely-must-ask-before-accepting-a-job-offer. Being interviewed is a two-way street. You need to interview the company!

But my favorite suggested question is actually the last one – where will you sit? My first job after graduating from law school, I had a public interest law fellowship. I was so excited about the fellowship, that I never thought to ask this question. For the first few months I worked there, they didn’t have a desk for me, so I floated from cubicle to cubicle that was intended for the volunteers, until they found a spot for me. A “spot” opened up because they moved the copier out of a cutout in the wall, which opened up a space to move a desk into. Then I shared an office, then moved to a dark closet that they tried to convince me was an office. When I worked at the cancer center, they actually did turn a closet into an office space for me.

If you’re going to spend so many hours of your day (in my case it was often 10-12) sitting in a space, you should make a conscious decision about whether or not that works for you. Maybe it’s not the type of job where you sit – it’s still important to ask yourself if it’s a place where you want to spend so many precious hours a week.

For more about the job search process, Cancer and Careers offers a free Job Search Toolkit.

Paid Sick Leave

Paid Sick LeaveEver wish your co-worker with a cold would stay home, instead of bringing their germs to work? Maybe they can’t.

In most states, employers are actually not required to provide you with time off from work if you are sick or you need to see a doctor. If an employer offers you paid sick leave, then it is typically their choice to do so. However, more than 40% of all private sector workers and more than 80% of lower wage workers do not have paid sick days. This creates a difficult choice between caring for your health and keeping your job.

President Obama asked Congress to address this issue by passing a federal paid family and medical leave law. The Healthy Families Act is currently pending in Congress and proposes giving eligible workers up to 7 days of paid sick leave each year. In the meantime, states and cities are trying to fill the gap.

There are now a few states and cities across the country that currently, or within the next year, will require most employers to provide some form of sick leave to their employees:

  • California
  • Connecticut
  • Massachusetts
  • Washington, D.C.
  • Eugene and Portland, OR
  • Jersey City, Newark, Passaic, East Orange, Paterson Irvington, Trenton, Montclair and Bloomfield, NJ
  • New York City, NY
  • Oakland and San Francisco, CA
  • Philadelphia, PA
  • Seattle and Tacoma, WA

Each law varies a bit in the details. Here is a good comparison chart of the various laws: http://www.abetterbalance.org/web/images/stories/Documents/sickdays/factsheet/PSDchart.pdf.

Following this trend, there are additional states across the country now looking at this issue. For example, Maryland’s legislature is currently reviewing a bill that would require Maryland businesses with 10 or more employees to provide their employees with paid sick leave.

Advocates for these laws argue that they help employers by allowing workers to stay home while ill, preventing the spread of diseases (such as colds and flus) and getting them back on the job faster.

To learn more about paid sick leave legislation at federal and state levels, visit www.paidsickdays.org.

Three Tips for Navigating Cancer & Your Finances

Cancer rights attorney and advocate, Joanna Morales, shares her advice for managing the financial impact and questions that accompany a cancer diagnosis.      

Most cancer survivors are unaware of their rights and the resources available to assist them through the vast maze of legal, employment, and insurance systems that can arise after diagnosis. And many of those individuals are completely unaware of the financial impact that cancer may have on their lives.  Fortunately, there are organizations and agencies to help cancer survivors and their families answer these questions and others.  Here are 3 tips as you start thinking about these issues:

Tip #1: Decide if you are able to work through treatment or take time off

The decision whether or not to work through treatment is a personal one and it may depend on your course of treatment, so it is a good idea to talk with your health care team when making this decision.  If you want and are able to work through treatment you can ask your employer for a reasonable accommodation under the Americans with Disabilities Act (ADA) or a state fair employment law.  The Job Accommodation Network is a program of the U.S. Department of Labor that helps employers and employees navigate the job accommodation process under the ADA.  Cancer and Careers is a nonprofit organization that specifically focuses on the practical issues related to work and cancer, including free job search tools, resume review services, and career coaching.

If you decide that you want to take time off either for a short or longer period of time, you may be eligible to take time off work under the Family and Medical Leave Act (FMLA).  You may also have disability insurance benefits available to you through your employer, your state, or the Social Security Administration (SSA), which is the agency responsible for providing cash and health insurance benefits to individuals who are unable to work because of their medical condition, through two long-term disability insurance programs: Social Security Disability Insurance and Supplemental Security Income.

Tip #2: Look into your health insurance options

Health care is expensive.  In addition to your monthly health insurance premiums, you may also have co-payments and co-insurance amounts that you have to pay when you get medical care or fill a prescription.  If you are uninsured or if you have insurance, but it is expensive, you can check out the new health insurance options (Medicaid or private insurance) available through the Patient Protection and Affordable Care Act, by visiting www.Healthcare.gov or the Health Insurance Marketplace in your state.

Tip #3: Understand your consumer rights

Figuring out what your financial picture looks like can help you identify priorities (e.g., do you need to find a job, do you have a stack of bills that you have been too afraid to open, etc.).  Figuring out your next steps is entirely personal to your situation.  Consider talking with a financial planner.  Financial planners work with people of all income levels so don’t feel like you don’t have enough money to utilize one.  Consumer credit counseling agencies can provide you with practical tools (e.g., financial calculators or budget worksheets) or help you negotiate payment plans or settlements with your creditors.  As a consumer, you still have rights.  Be aware that some debt solutions may negatively affect your credit score.

It is important to check that your medical bills are accurate, dispute them if there are problems, and if you believe a procedure or treatment should have been covered, and it wasn’t, you have the right to appeal that decision.  Talking with your creditors before they turn over your unpaid bills to collections agencies, can help protect your credit.  If you can’t make a payment, ask for more time.  Check to see if they would be willing to negotiate a payment plan or accept a lower lump sum payment.  There are also many financial assistance programs available in the cancer community that may be able to assist you.

Arming yourself with information about your legal, employment, insurance, and consumer rights –  getting assistance from these resources can help you manage the financial impact of cancer.

 *This blog was originally posted on the My Colon Cancer Coach Blog in August 2014. For more information about colon cancer, visit My Colon Cancer Coach at http://www.mycoloncancercoach.org/.


How disability insurance can help pay the bills

disability insuranceOne common concern after receiving a cancer diagnosis is, “How can I continue to earn a living if cancer leaves me unable to work, either for the short-term or long-term?” Disability insurance can provide you with some income when a medical condition, including cancer, leaves you unable to work. The federal government, some state governments, and private insurance companies offer different types of disability insurance benefits.  The key is to figure out which one fits best with your needs and situation. Federal disability insurance includes two programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), which are both administered by the Social Security Administration (SSA).  In order to receive federal SSA disability benefits, your cancer diagnosis and/or side effects from treatment must keep you from working on a  long-term basis, which is at least one year or longer.  You can receive SSDI benefits if you are “insured,” meaning that you have a long enough work history and have paid Social Security taxes.  You are able to receive SSI benefits, if you have a low income, and are age 65+, or blind, or have a disability. If you live in California, Hawaii, New Jersey, New York, Puerto Rico, or Rhode Island, you may qualify for short-term disability insurance from the state.  The amount varies per state, but the maximum amount of time that you can receive benefits for a short-term disability is between six to twelve months. Private disability insurance is another option for both short-term and long-term disability insurance benefits, and can be purchased directly from an insurance company or it can be available to you as an employee benefit from your employer.  Some individuals choose to purchase private disability insurance to supplement state or federal disability benefits, since they typically only pay a portion of a person’s income.  For example, the average payout from Social Security benefits is only about 40% of a person’s salary and some state disability insurance programs only pay about 50% of a person’s salary. For a quick guide to disability insurance, click here. For more information about SSDI, click here. For more information about SSI, click here. To find your state disability insurance program, click here.