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How does the Plan Administrator control what the person does with the money after it leaves the plan? I have always thought this is possible to see happen. The person gets the check and doesn't use it for the purpose they used to justify the hardship distribution. I just don't ever recall from my 401(k) days anyone being so brazen as to not spend the money as stated and then ask for more with the same reason. To me this falls under the Plan Administrators powers to reasonably interpret the plan document provisions in a nondiscriminatory manner. I think the Plan Administrator needs to decide how they want to handle this situation, document it and be consistent. It seems logical to deny the withdrawal otherwise what is to stop this person to just keep coming back for more and more money which seems to violate the spirit of the rules and provisions if nothing else. I have never seen a written rules that covers this fact pattern.

In 35+ years, I've never seen any plan document or administrative procedure that made any reference to a POA.

I like that they tried to talk to him 415 times

"How does the Plan Administrator control what the person does with the money after it leaves the plan?" If the plan has conditions for the loan, then the proceeds should be distributed in the same way as for hardships. The payee of the check should be the person to be satisfied. In this case, the check should have been made payable to the tax authority. The plan administrator stopped short of making sure the plan terms were carried out faithfully

Perhaps you are thinking about the requirement for safe harbor matching plans? This requires that if the SH match is calculated on a payroll method, the matching contributions for a given quarter must be deposited by the end of the following quarter.

The Employer may have a different problem: an employee who has lied.

Yeah, but weighing that against the obligation to enforce the participants rights under the written terms of the plan? It's given that the Plan Administrator has a responsibility to ensure that that plan doesn't pay unreasonably high expenses, but I'm not sure about the notion of denying a Participants rights to a distribution under the terms of the plan for purposes of having the share in anticipated expenses; especially if that delay is longer than 3 business days. Good Luck!

The premium payment can reduce taxable income outside of a section 125 arrangement, but such arrangements are unusual. It the employer has an unusual arrangement, the employer should be able to tell you, but employers are often clueless, especially a few years after adoption. GMK's suggestion to check the W-2 presentation probably would resolve the questions.

I've seen a POA a few times. In every case, the PA got its own confirmation/legal opinion that a POA was valid or not. (This may have included other practicalities, such as other known evidence about a participant's disability, etc.) In all cases, the PA was clear that lack of authenticity of the POA would mean "don't do anything", except that the plan's appeal process may be triggered by the submission of a (proposed) POA. If the POA was determined to be valid, the same legal advisor would describe whether the POA has limitation(s) within the plan context. (IMHO, this last part is essential, and is evidence that the legal advisor reviewing the POA should be an ERISA attorney.) As the actuary, I give my opinion only when requested by the PA, but always defer to opinion of the legal advisor.