If any of our Florida clients are planning to, or have withdrawn money from your employer-sponsored retirement account under the hardship provisions as a result of Hurricane Irma, please consider what it means to withdraw money that is taxable. Although the early withdrawal penalty will not apply in the case of a hardship withdrawal, the amount will add to your taxable income; thus increasing your 2017 tax amount.
If you are using the Obamacare Advanced Premium Payments, making a hardship withdrawal from your 401k or other employer-sponsored retirement account will increase your family income for the year, and may result in you having to return some of your Obamacare money; called an Excess Advance Premium Repayment. Many of our clients already know what an unwelcome surprise this is. If you do not plan accordingly, you may owe both a higher tax, and have to return some of your Obamacare Premiums too.