Hardship Distribution of Roth Deferrals

[MarZDoates]

Participant wants to take a hardship withdrawal. He has roth deferrals only. The distribution would not be a "qualified" distibution under the Roth rules. Since we can only distribute deferrals (and not earnings) for a hardship, would this be non-taxable?

[masteff]

Since we can only distribute deferrals (and not earnings) for a hardship, would this be non-taxable?

You are partially incorrect. While the amount that can be distributed in a hardship is based on the amount of deferrals (and not earnings), you must allocate a portion of designated Roth account earnings to the withdrawal of designated Roth contributions. See Q&A-8 here: http://www.law.cornell.edu/cfr/text/26/1.402A-1

[MarZDoates]

Thank you. That's exactly what I was wanting to know!!!