Document says hardships available from elective deferrals only; partic

[Guest Jane Freeman]

A participant has requested a Hardship Withdrawal from his 401 (k) plan. The document states hardships can be withdrawn from elective deferrals only. The participant has a rollover account that is elective deferrals made through his previous employer. Can the participant take the Hardship from the rollover account?

Thank you.

[Ervin Barham]

My first response is no, because once amounts are rolled over, then the original source does not matter.

However, check your plan document. In some prototypes, amounts contributed as rollover contributions may be withdrawn, but no more than once per year. I have not seen that in all of them though. If that is in your document, then the participant would have to withdraw the rollover first, since to get a safe harbor hardship, all available loans and distributions must be taken first.

If the plan does not allow withdrawal of rollover contributions until termination of service, then he/she is stuck with only the deferrals made with this plan. Check with your document provider as well!