Question: I'm under 59‡ and need to take a hardship withdrawal from a retirement plan. What should I do to minimize taxes and penalties?

Answer: Try borrowing instead of withdrawing from a retirement plan.

Dave Roettker, portfolio manager with Johnson Investment Counsel, says that people needing extra money should look to retirement plans only as a last resort because of taxes and penalties.

But if money is needed for only a short period and can be repaid within 60 days, you can take money out of your IRA, use it for up to 60 days, then roll the same amount back into an IRA with no taxes or penalties.

This can be done only once per consecutive 12-month period and special care should be taken not to exceed the 60-day limit or any amount not reinvested in an IRA could be taxed as ordinary income, plus a 10 percent penalty.

A Roth IRA may provide some funds that can be withdrawn without taxes or a penalty, as long as you withdraw only your contributions and not what they've earned.

The other source for hardship withdrawals or loan may be your 401(k) plan. If your plan allows loans, you may have to take a loan prior to being eligible for a hardship withdrawal. Be careful that you repay the loan before leaving the job or the loan may become a withdrawal with taxes and penalties.

Hardship withdrawals are taxed as ordinary income, plus a 10 percent penalty (although this penalty is sometimes waived if due to medical expenses).

Also be aware that if you take a hardship withdrawal, you cannot contribute to your 401(k) for some period of time - usually 6 months.

Withdrawals from any retirement plan before age 59‡ involve careful consideration and planning to keep taxes and penalties to a minimum.

Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary. Planners: Share your unique tips with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati, OH 45202 or e-mail ahiggins@enquirer.com.