Hardship Withdrawal

[Pammie57]

Does anybody know if there is a problem taking a hardship for elective surgery aka cosmetic surgery.   We have a participant who wants a hardship withdrawal for surgery that is classified as cosmetic.  However, after hearing the facts - it really is more preventive.  They have submitted the surgeon's estimate as proof of the amount requested.  Thoughts/comments appreciated.

Thanks

[C. B. Zeller]

Assuming that the plan document allows the safe harbor definition of hardship found in the regs, the definition of medical hardship under 1.401(k)-1(d)(3)(iii)(B)(1) is "Expenses for (or necessary to obtain) medical care that would be deductible under section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income)."

213(d)(1)(A) defines "medical care" as including amounts paid "for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body."

So if the procedure "affects any structure of function of the body" (which seems extremely broad) then it seems to me that it would fall within the safe harbor definition of a hardship.

[Pammie57]

Thanks!

 

[NJ Mike]

You may want to review IRS Publication 502, which lists items that are not deductible.  Here is the information regarding Cosmetic Surgery:

What Expenses Aren't Includible?

Following is a list of some items that you can't include in figuring your medical expense deduction. The items are listed in alphabetical order.

Cosmetic Surgery

Generally, you can't include in medical expenses the amount you pay for unnecessary cosmetic surgery. This includes any procedure that is directed at improving the patient's appearance and doesn't meaningfully promote the proper function of the body or prevent or treat illness or disease. You generally can't include in medical expen-ses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuc-tion.

You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a de-formity arising from, or directly related to, a congenital ab-normality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

Example. An individual undergoes surgery that re-moves a breast as part of treatment for cancer. She pays a surgeon to reconstruct the breast. The surgery to recon-struct the breast corrects a deformity directly related to the disease. The cost of the surgery is includible in her medi-cal expenses.

 

[Larry Starr]

On 4/5/2018 at 2:42 PM, Pammie57 said:

Thanks!

 

Save your thanks; it has been long established that purely cosmetic surgery is NOT a deductible medical expense but a personal expense and as such, would NOT meet the criteria for a hardship withdrawal. That's why nose jobs always fix a "deviated septum".  MAGIC!  Now it's deductible! 

The original question is not clear; what is going on? If it truly is "preventative", then it may very well be allowed.  Removal of a breast that is not cancerous but where the individual is shown to have a significant chance of breast cancer would be acceptable.

FWIW.

[RatherBeGolfing]

22 hours ago, Larry Starr said:

Save your thanks; it has been long established that purely cosmetic surgery is NOT a deductible medical expense but a personal expense and as such, would NOT meet the criteria for a hardship withdrawal. That's why nose jobs always fix a "deviated septum".  MAGIC!  Now it's deductible! 

The original question is not clear; what is going on? If it truly is "preventative", then it may very well be allowed.  Removal of a breast that is not cancerous but where the individual is shown to have a significant chance of breast cancer would be acceptable.

FWIW.

Eyelid surgery is another perfect example.  Its usually cosmetic but it is called medically necessary due to impaired vision and so on.  I have even seen doctors here in Florida advertise something like  "want eye lid surgery but can't afford it?  We can get your insurance to cover it!"

[Larry Starr]

4 hours ago, RatherBeGolfing said:

Eyelid surgery is another perfect example.  Its usually cosmetic but it is called medically necessary due to impaired vision and so on.  I have even seen doctors here in Florida advertise something like  "want eye lid surgery but can't afford it?  We can get your insurance to cover it!"

"Wot a country" (LS for  Yakov Smirnoff)

[Pammie57]

The original post was concerning a person who is very  high risk for breast cancer.   I am not sure how detailed the plan sponsor can get   with inquiries -  HIPAA  violations and all are always a concern.

[TPAJake]

Larry used your exact situation above...If he says it is allowable, I don't think the sponsor needs to get very detailed with their inquiries.  

[Larry Starr]

2 hours ago, Pammie57 said:

The original post was concerning a person who is very  high risk for breast cancer.   I am not sure how detailed the plan sponsor can get   with inquiries -  HIPAA  violations and all are always a concern.

Very unlikely that REMOVAL of a breast (and the attendant reconstruction) would EVER be cosmetic surgery.  If that is what is going on, there is no issue here.