"F&C" Hardship Conditions

[SMB]

I have a client whose 401(k) Plan uses the "facts & circumstances" general approach to defining the conditions which qualify as "financial needs" for hardship distribution purposes. The Plan document does not delineate the conditions, but merely states that the employer shall adopt a written policy setting forth same.

This is my first encounter with the "F&C" approach to hardships and was wondering - other than the usual IRS "safe-harbors" - for those of you whose Plan or clients' plans use this approach, what other types of "financial needs" are being used?

Thanks for any and all input.

[Guest Sieve]

Depends on the facts & circumstances, of course . . .

I don't see F&C much anymore, either, but I've seen an employer determine that a F&C hardship exists where an unmarried employee's car needs replacement and there is no adequate/appropriate public transportation for that employee to get to work.

[K2retire]

The plan where I work (not any that we allow our clients to use) specifies that home remodeling is an allowable hardship. I'd love to know how they got that approved!

[BG5150]

I seem to remember that under a F&C, the participant must exhaust any and all methods of obtaining the money before taking the h'ship. That included liquidating holdings in brokerage accounts and selling other assets as boats or vacation homes before being able to take the h'ship.

[Guest Sieve]

The employer can rely on the participant's representations re: whether the need can "reasonably" be met with other assets, even if the hardship distribution is based on facts & circumstances (rather than SH hardship events). (Treas. Reg. Section 1.401(k)-1(d)(3)(iv)©.)

[SMB]

Might anyone have a set of "facts & circumstances" hardship guidelines that they'd be willing to share? Simply trying to get an idea of just how best to approach.