Does A Downpayment for a Rented Home Qualify As A Hardship?

[metsfan026]

We have a participant who is asking if this situation falls under a Hardship:

Due to a legal divorce, the participant has to move out of their house and needs a deposit for an apartment (first and last month's rent).  

It's not purchasing a primary residence, so I wasn't sure if this would apply.  Thanks in advance for your input!

[Peter Gulia]

Thoughts about other ways:

If the plan allows participant loans, might this participant prefer to borrow a needed amount, with an opportunity to repay over five years?

If the plan provides (or might be amended to provide) a § 72(t)(2)(I) emergency personal expense distribution, might that be a partial fit for the participant’s needs? A distribution can be “for purposes of meeting . . . immediate financial needs relating to necessary personal or family emergency expenses.” I.R.C. (26 U.S.C.) § 72(t)(2)(I)(iv). Practically, this distribution is almost standardless, especially if the plan provides it on a participant’s self-certifying claim. Although $1,000 might be much less than the participant needs, it might be better than nothing. I.R.C. (26 U.S.C.) § 72(t)(2)(I) https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partII-sec72.htm.

This is not advice to anyone.