# of hardships

[JKW]

Is there a limit to the number of hardships a person can take within a plan year or within 12 months. The plans document does not specify any hardship limits except to only take from deferrals. The participant in question took a hardship in Sept 2009 and is requesting another to prevent forecloure. Thanks.

[masteff]

If the plan is silent, then no, no limit. It's not unlikely to see it for something recurring like education or on-going medical treatment.

[JKW]

Thank you.

[401 Chaos]

Curious to hear what most people see regarding hardships to prevent foreclosure. If you have a participant who obviously is having some severe cash issues, can you provide a few months of mortgage payments once they get in arrears in order to help get them back on track and give some breathing room or does the individual have to be in late payment mode (with foreclosure looming and threatened, etc.) with future months before they can get a distribution for those months. Thanks.

[masteff]

401Chaos,

The problem is the words "to prevent foreclosure".... my opinion (and the policy we used at my former job) is you can't "prevent" something until it's actually imminent.

That said, it's really easy to get a mortage company to send a past due demand letter once the payment grace period has passed. Heck, most will even fax it if it means they'll get paid faster. Most demand letters include language to effect of "bring your payment current or we'll begin foreclosure proceedings", which we accepted as sufficient threat/risk of foreclosure.

Our policy was then to allow w/drwl of past due plus two months forward (plus tax gross up). Note that before allowing a subsequent hardship, it has to be for a month not provided for in an earlier hardship withdrawal (ie not part of the prior "two months forward").

[401 Chaos]

Masteff,

Thanks very much. The 2 month forward approach is pretty consistent with what we have done as well.