Hardship Withdrawals after Termination

[Guest KAGrist]

A plan I am working on only allows for a terminated employee to receive a lump sum payout after a break in service has been incurred. This means that some former ee's must wait a lengthy period of time (some more than 1 year) before receiving their final distribution.

My question is whether a terminated participant, who is not yet eligible to withdraw his account because of the break in service rule, may still be eligible to use the hardship withdrawal as a means to get to their money (as long as they qualify on account of immediate and heavy financial need).

I cannot find anywhere in the Plan document that says this is disallowed, however, I was always under the impression that a hardship was only an in-service withdrawal, and that in-service meant the participant was employed. What are your thoughts on this?