Archimage Posted June 18, 2008 Posted June 18, 2008 Is there any operational or regulatory reason that a plan should not allow hardship distributions from other sources besides the deferral source?
JanetM Posted June 18, 2008 Posted June 18, 2008 Regulations allow under 401(k)(2)(forget the rest) for hardship from all sources. Would be up to the sponsor to decide which way to go. Back when I did TPA work I had PS plans that had this. Regular group of employees would skip the Oct, Nov, Dec house payments and go Christmas shopping then take distribution to catch up in January. In my view it opens up the door to free money that many can't resist. JanetM CPA, MBA
Below Ground Posted June 18, 2008 Posted June 18, 2008 In support of Janet's comment, anytime you have a provision that allows for taking money out, you can be 95% certain that some person will figure out how to use for a purpose that is not as intended. Is your Plan for retirement, or something else. If the latter is true, then there you have it! Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing? QPA, QKA
GMK Posted June 18, 2008 Posted June 18, 2008 JanetM and Below Ground have it right. And as always, check for what the Plan document allows.
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