Immediate and Heavy Financial Need

[Guest meeh3704]

I'm wondering about the meaning of immediate and heavy financial need under 1.401(k)-1(d)(3)(iii)(A). If outside the safe harbor, is there any guidance/commentary other than what is provided in the regulation regarding the meaning of such term. If an employee's wages are being garnished because of a tax lien to a point where the ee is left with almost no income, then would that be enough for an immediate and heavy financial need, or do you need to wait until the point in time when the ee has missed mortgage payments, etc.

[QDROphile]

The plan is not limited to the safe harbor events under the regulations unless the plan terms limit distributions to the safe harbor events. If you get outside of the safe harbor, there is really no reliable guidance but there are circumstances that qualify, depneding on the standards set by the plan terms and how thos standards are applied by the fiduciary. For example, the plan could list some additional events, such as overdue federal income tax liability that is subject to collection actions -- but no one is going to assure you that such circumstances qualify despite personal beliefs to that effect. That uncomfortable situation is why most plans stick to the safe harbor criteria.