Hardship Withdrawal - Eviction Notice Required?

[Guest JHLUBB]

Using the 6 IRS approved safe harbor reasons, does a participant have to be in the foreclosure/eviction phase to be eligible under that reason, (i.e. does the plan sponsor need to see an actual Evicture/Foreclosure Notice). Participant has provided copies of his mortgage statements showing he is "late" by 2 months but it does not reference foreclosure proceedings. What is sufficient proof for this reason?

[Guest Sieve]

There is no specific guidance. Some would say what you have is sufficient, even for more than just the payments mentioned but also for a few future payments to further stave off foreclosure. On the other hand, some (me included) would say that you need actual commencement of eviction procedures, or close to it, to justify a hardship distribution. Otherwise, anyone can get themselves 2 months behind in mortgage payments, just so they they can qualify for a hardship distribution. But I don't think you'll find a consensus of opinion here on what is sufficient

And, don't forget that a violation of the hardship distribution rules is a tax-qualification issue, not just an individual participant issue.

[Guest JHLUBB]

Thanks - I agree with you that being 2 months behind is no where near the same "financial" hardship as being evicted/foreclosed upon. I require the actual eviction notice in order to qualify the request so i appreciate your feedback on this topic