Hardship withdrawal and taxes withheld

[Santo Gold]

A 40 year old participant in a PS plan (with rollover money) is looking to take a hardship withdrawal for almost all of his account balance for the purchase of a home (1st time home buyer). Am I correct that this is not an eligible rollover distribution and therefore taxes do not need to be withheld? Also, the 10% early distribution tax does apply so he could gross up the hardship amount to cover the 10% penalty. Finally, can the TPA fee be paid directly from the participants account?

Thanks

[Guest 401der]

If the plan allows in-service withdrawals from the rollover account for any reason, the entire rollover balance distributed would be eligible for rollover, as it would not be part of the hardship withdrawal.