Hardship Withdrawal vs. Bridge loan for two mortgages (new house and old house that has not yet sold).

[Guest CRA]

I have a participant that just purchased a new residence. Unfortunately, the contract on their current residence fell through. They are currently moving into the new residence, but have not been able to sell their current residence. Would this participant qualify for a hardship withdrawal, based on these facts and circumstances? My initial thought is no because 1) no foreclosure notice has been served on the "old" residence and 2) they will not be living in the "old" residence when and if the notice is served. I am interested in anyone else's thoughts/ideas!

[FundeK]

Does this plan use the safe harbor standard or the general standard in determining the hardship? If the safe harbor is used, then no, the participant would not qualify. It is not being used for the purchase of a primary residence because he has already completed that purchase, and it can not be to prevent eviction as he does not live in the old house. If the general standard is used, then there is a bit more flexibility as the Plan Sponsor is determining if there is an immediate and heavy financial need. Of course, if the plan allows loans, the participant needs to take a loan first. (unless the loan would create more of a hardship) Could the participant take a loan?

[Guest CRA]

Thanks for your reply. Safe harbor standards do not apply, nor does the plan allow loans. I will run by the plan trustee and we'll go from there, unless you have additional thoughts.