Limit Number of Hardships Permissible?

[Fielding Mellish]

Plan wants to add hardship distributions, but the Trustees want to limit the number of times a participant can take a hardship. For example, a participant is allowed a maximum of 2 hardship distributions total.

In my experience, a Plan can make the hardship distribution rules pretty much whatever it wants, especially if it limits the hardship options to the safe harbors contemplated by IRS regulations. But I haven't seen any regs saying if a Plan can limit the number over the Participant's time in the Plan.

Is there anything that would prohibit the Trustees from adopting such a provision? Thanks.

[Lou S.]

Unusual but don't see where it would be discriminatory.

I have seen plans that limit hardships to no more than 1 per calendar year but never seen one that puts a life time cap on it. I would think the biggest issue might be tracking such a cap, especially over time if the plan moves through multiple record keepers and you could easily inadvertantly fail to follow the terms of the plan by accidentially granting a 3rd hardship.

[dashab]

I agree.