SH Available for Hardshipd after 59.5?

[austin3515]

Plan allows hardships, but not in-service distributions. Can a participant age 62 take safe harbor money in the event of a hardship?

[austin3515]

I have the same question for Money Purchase money - i.e., participant is over the NRA, but plan does not allow for in-service distributions.

I believe the answer is NO to both questions (based on the document) but it seems silly not to allow it in thse situations.

[Lou S.]

I believe 1 is yes and 2 is no. I also agree it is silly not to allow them in both situations.

[austin3515]

My Corbel EGTRRA 401k says: "HArdship distributions are NOT permitted from a participant's QNEC Account (incluidng any 401(k) Safe Harbor Contributions) or QMAC account."

No elaboration regarding age 59 1/2. So I'm thinking that if there was an option to qualify it based on age they would have.

[austin3515]

Definition of a QNEC (401 (m)(4)©). says it must meet the requirements of paragraphs B and C. The problem appears to be that hardship is not listed under (B). I realize that it is somewhere else as an exception for 401k contributions, but apparently not for QNEC's. Does anyone think I have the analysis correct here?

(B) under which amounts held by the trust which are attributable to employer contributions made pursuant to the employee’s election— (i) may not be distributable to participants or other beneficiaries earlier than— (I) severance from employment, death, or disability, (II) an event described in paragraph (10), (III) in the case of a profit-sharing or stock bonus plan, the attainment of age 591/2, (IV) in the case of contributions to a profit-sharing or stock bonus plan to which section 402 (e)(3) applies, upon hardship of the employee, or (V) in the case of a qualified reservist distribution (as defined in section 72 (t)(2)(G)(iii)), the date on which a period referred to in subclause (III) of such section begins, and (ii) will not be distributable merely by reason of the completion of a stated period of participation or the lapse of a fixed number of years; <A name=k_2_C>© which provides that an employee’s right to his accrued benefit derived from employer contributions made to the trust pursuant to his election is nonforfeitable, and

[Lou S.]

Upon further review I believe you are correct. Wouldn't hurt to ask for a clarifiaction from the horses mouth (in this case Corbel) since they drafted the doc.

You can always have the client amend in an in-service to cover both problems but then I'm sure you are aware that's gonna apply to everyone.