Hardship Withdrawals of Principal Residence

[kevind2010]

I'm not sure I fully understand the safe harbor hardship reason that allows withdrawals to pay for expenses for the repair of damage to the Participant's principal residence that would qualify for the casualty deduction under Code Section 165. I tried reading the code, but was hoping someone could explain in a more understandable way. A participant that has flood damage to their basement, but no flood insurance - would that be considered a hardship for which they could withdraw? Code section 165 talks about federally declared disasters. Must the residence be located in a disaster area or can anyone who incurs a bad rain storm that results in a flooded basement request a hardship? Any clarification is appreciated. Thanks!

[Guest Sieve]

Look at IRS Pub 547: http://www.irs.gov/pub/irs-pdf/p547.pdf

[joel]

Look at IRS Pub 547: http://www.irs.gov/pub/irs-pdf/p547.pdf

You are covered if your HO policy covers seepage or water back up due to inoperable sump pump. Check your declaration page of your policy.

Having said that, Flood insurance is separate and distinct from your HO and is only available thru the Federal Govt. "A flood" is ground level water that rises high enough to enter the first floor of your home. One can have flood damage to their basement without sustaining a "flood"-----know the difference.