Hardship Withdrawal for Health Insurance Premium?

[Doghouse]

Health insurance premiums for a partner in a partnership are paid by the partner and deducted on his personal return. Does the fact that this expense is classified as deductible by IRC Section 213(d) make it hardship withdrawal-eligible? Assuming that all the other requirements are met. And if not eligible, what specifically excludes it?

Thanks!

Dog

[BG5150]

Under what terms may a participant take a hardship withdrawal per the document? Safe Harbor rules?

If so, what category would it fall under?

[Doghouse]

yes, safe harbor rules, and it would be classified as qualifying medical expense.

[BG5150]

But insurance premiums aren't a direct expense of medical care, are they?

[Doghouse]

Code and regs refer to expenses deductible under 213(d):

(d)DefinitionsFor purposes of this section—

(1)The term “medical care” means amounts paid—

(A)

for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,

(B)

for transportation primarily for and essential to medical care referred to in subparagraph (A),

(C )

for qualified long-term care services (as defined in section 7702B©), or

(D)

for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)).

In the case of a qualified long-term care insurance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D).

[Doghouse]

I can't believe this isn't getting more response. It would seem to be a common question.

[rcline46]

A immediate and heavy financial need - the very definition works against a planned and regular premium. Also, what happened cannot be covered by loans or other outside assets to be a hardship. A planned premium just doesn't make it (in my opinion of course). Strong opinion to follow.

[My 2 cents]

If someone uses retirement funds from a 401(k) to pay for current medical insurance premiums while still employed, what are they going to do for an encore (when they retire)?