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Another issue that was not discussed here is the threat of fraud. Although standard ISD requests are the more common type, I imagine that self-certified hardships (without any involvement from the employer) could lead to nefarious activity by scammers. With hardship documentation required, there are at least other means to determine that the person requesting the hardship is indeed the actual participant. With employer involvement, they can actually check with their employee to determine if a request was made. Although online requests at least block people behind a username/password (and, hopefully, MFA) security, it can still be hacked. And, with forms, it would be even easier for a scammer to complete it, self-certify a hardship, and get a fraudulant distribution.

Peter, you are doing rather well. Some of what I remember about YESTERDAY is dimming...

Corey B. Zeller, thank you. If a recordkeeper requires the plan administrator’s confirmation that the administrator lacks knowledge contrary to the self-certifying claim on each claim, that interruption could defeat the value of instructing the recordkeeper to process the claims without the administrator’s involvement. Instead, might a recordkeeper accept (at least from a big-enough customer advised by its lawyers) a plan administrator’s instruction to process the hardship claims presuming the administrator lacks knowledge unless the administrator intervenes? After all, isn’t it a plan’s sponsor/administrator that owns the risk of a tax-disqualification because the plan allowed a distribution contrary to § 401(k)(2)(B)? And shouldn’t a service agreement relieve the recordkeeper from a liability or expense that results because the recordkeeper obeyed the administrator’s instructions? Paul I, thank you for your helpful explanation about recording sponsor/administrators’ instructions about plans’ provisions and administration methods, and about ordering of steps in a system logic. (It has been almost 18 years since I left inside experience with recordkeeping operations, and some of what I remember about that work is dimming!)