Safe-Harbor hardship distribution

[Guest bmurphy]

Mother of participant in 401k plan died - she had unpaid Medicaid

bills of $10,000 which participant is told he must pay as executor of estate. Plan uses safe-harbor distribution rules - I don't see any way he could request a hardship here. Anyone have any different views on this? Thank you.

[jaemmons]

If the mother was a dependent (as defined in IRC 152) of the participant, then would meet the safe harbor requirement to take a hardship for medical purposes, assuming the plan allows for hardship distributions. I don't see any reason why Medicaid expenses wouldn't qualify as a legit medical expense under IRC 213.

[mbozek]

There is something strange about this story. Medicaid has a claim against the assets of the deceased receipient if the decedent's assets exceed a specific monetary amount. An executor is not personally liable to pay the debts of the deceased reciepent unless the executor inherits property from the deceased for which medicaid has a lien. Medicaid is administered on a state by state basis and each state can enact different rules regarding which assets are subject to recovery. You need to check this story out a little more. Also many State Medicad agencies make exaggerated claims against property which is not recoverable to maximize amount that can be recovered. I think your participant needs to consult counsel.