Hardship Distributions - Distributable Amount

[lkpittman]

May earnings on elective deferrals be included in the distributable amount for a hardship distribution? I have an institutional trustee who refuses to distribute the earnings (even though the plan document says it's okay) because he says "federal statute" won't allow it. I assume he is referring to the 401(k) regs (1.401(k)-1(d)(2)(ii), but I think he is misreading. Can anyone confirm?

[R. Butler]

For the most part the trustee is correct. Earnings on elective deferrals can only be distributed as part of a hardship withdrawal if they were credited to the employee's account prior to 12/31/88.

[lkpittman]

Thanks--that's how I read the regs. Problem is we've got a poorly written amendment and the plan sponsor thinks all earnings can come out!!!!!