Hardship withdrawal approval

[pixmax]

As a TPA I am having a problem approving a Hardship withdrawal for an owner. The participant has an estimate to fix a roof and has termite, mold problems. This is not due to a loss from hurricane, flood etc. and he has not submitted a claim through insurance. He only has an estimate and has no intention on using the money to fix the problem since he is selling the house. Are we liable or are we just responsible for signing off on the vesting and the Plan Sponsor is liable for approving the hardship ? Under audit this could be a potential problem?

[QDROphile]

Approval of a hardship distribution is a fiduciary function if it involves anything but ministerial execution. As a TPA you should be very senstive about the nature of the services you provide.

[BG5150]

Does the plan allow only "safe harbor" conditions for hardships?

If so, one of the allowable situations are repairs to a home that are not covered by insurance and are thus deductible under

§165. However there in no % of AGI involved.

So, whoever is reviewing this case should need proof that the repairs are not covered by insurance and are indeed deductible under§165.

Does the plan allow for loans? Is an in-service withdrawal available to this person otherwise?

Or, does the plan use a "facts & circumstances" approach to hardship consideration? If so, there's a laundry list of things to consider.