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Hardship - Foreclosure


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An employee requested a hardship distribution to prevent foreclosure on his principal residence.  The foreclosure notice is not addressed to the employee, however.  It is addressed to the estate of the employee's deceased father, care of the employee's brother.  The address of the property is the same address we have on file as the employee's home address. 

I'm inclined to recommend approval of the hardship request, as this appears to be the employee's principal residence that is in danger of being foreclosed on, but I'm concerned that the property is apparently owned by someone other the employee or his spouse.  Any help would be appreciated.

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If the plan’s provision follows 26 C.F.R. § 1.401(k)-1(d)(3)(iii)(B)(4), that the participant does not own the real property should not, by itself, negate a deemed financial need if the residence is the participant’s principal residence and he or she needs the plan’s distribution to prevent an eviction of his opportunity to live in his principal residence.

 

About whether the participant lacks other resources, consider whether the plan empowers its administrator to rely on the claimant’s written statements.

 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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