Land Purchase

[Guest Donell]

I have a participant that is purchasing a lot (the loan documentation states that it is a "lot loan") and has requested a 401(k) hardship distribution for this. The lot happens to have two trailers (mobile homes) on it. One will be removed, and the other will become their principal residence. Is this a eligible reason for a 401(k) hardship distribution?

[masteff]

The reg says: "(2) Costs directly related to the purchase of a principal residence

for the employee (excluding mortgage payments);"

For a previous discussion on what might qualify as a principal residence, see these prior thread: http://benefitslink.com/boards/index.php?showtopic=38818

http://benefitslink.com/boards/index.php?showtopic=46172

My opinion is that yes, I'd allow it, but not for anything related to the removal of the other trailer.