Hardship withdrawals-medical expenses

[Guest Lonnie Tomlin]

Another question-how far back can a participant go for medical expenses for a hardship? If someone has already paid the expense it would not appear to be acceptable. On the other hand you have someone who was in a serious motorcycle accident and has been out for almost two years. He continues to run up medical expenses and has some that are outstanding. Can we cover outstanding legitimate medical expenses going back to the accident occuring?

[Guest earthy]

I think it is okay to cover these expenses since the facts and circumstances show a continuing immediate and heavy financial need. This is a 401(k) or 403(B) plan and not an eligible 457(B) Plan - correct?

If the plan is a 401(k) or 403(B), I would just make darn sure that this participant does not have the ability to pay for these bills from other resources available to him/her.

The 401(k) rules permit the hardship distribution on account of financial need even if the participant can reasonably foresee the event or has voluntarily incurred expenses.

The 457(B) rules are more strict.

earthy

[R. Butler]

The administrator doesn't have to investigate the participant's ability to pay too hard. As long as the administrator doesn't have evidence to the contrary, he/she can rely on the participant's written representation that the need cannot be met from other sources.