Hardship Withdrawal for Tuition

[Guest ChristineFL]

Hi, I have a Hardship Withdrawal request for a dependent who just finished the semester and has a past due balance. Does this qualify? Or must it be for a current or future semesters? The IRS reasons state:

Payments of tuition and related educational fees, as well as room and board expenses, for up to the next twelve (12) months of post-secondary education for the Participant, Participant's spouse, child, or dependent (as defined in Section 152 of the Code).

Thanks!

[pmacduff]

our hardship forms/plan doc/information specifically states"....for upcoming semester for self, spouse or dependent(s)... so in our case, past due tuition does not qualify.

what does your plan doc say about hardships?

[masteff]

To the best of my knowledge, past vs future is plan subjective (as pmacduff notes above). If the plan doesn't restrict it, I personally would allow for this. I might have to think more closely if it were for an older semester than the one just finished.

[Guest Sieve]

Also depends, I guess, on how you interpret the regs: "Payment of tuition . . . for up to the next 12 months of post-secondary education . . ."

Does it mean only future education? Or, past or future, as long as it does not extend beyond 12 months into the future?

Of course, it's not really an issue if you don't use the SH hardship distribution events or if it relates to non-employee deferrals.

[BG5150]

I would say if there is an outstanding, unpaid bill, then it would qualify.

[masteff]

Also depends, I guess, on how you interpret the regs: "Payment of tuition . . . for up to the next 12 months of post-secondary education . . ."

Does it mean only future education? Or, past or future, as long as it does not extend beyond 12 months into the future?

Of course, it's not really an issue if you don't use the SH hardship distribution events or if it relates to non-employee deferrals.

If we think of having two threshholds in time, one in the past and one in the future, then I always took the "for up to" clause as setting where the future threshhold lies w/out speaking to the past threshhold.

[Guest Sieve]

Logical approach, masteff. So, do you think that logic puts it outside the realm of acceptability for an IRS auditor . . ?