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Is it mandatory to have a 6 month suspension of deferrals after a hardship withdrawal? A university plan has a custom document that is silent on the subject.

To further complicate the question, some employees in the plan must make mandatory deferrals as a condition of employment. In that case, how can deferrals be suspended if they are deemed mandatory by the plan document?

Posted

Not mandatory, but there is a different mandatory six-month suspension rule unrelated to the hardship distribution rules. The six-month suspension rules for hardships are for those who wish to suspend use of brains for hardship distribution administration.

Posted

Not a defined contribution practitioner, but I am having trouble making sense of the fact that the plan (a) requires participants to make mandatory deferrals as a condition of employment and (b) permits hardship withdrawals of those same deferrals.

I have seen mandatory contributions to defined benefit plans as a condition of employment, but those plans tend to say that under no circumstances can there be any withdrawal of such contributions while employed.

Always check with your actuary first!

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