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Hardship Withdrawals within NQDC


Guest EdwardF

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Guest EdwardF

Do any formal guidelines exist regarding valid reasons for a hardship withdrawal within a nonqualified deferred compensation plan? The current plan document states that a participant may apply for a hardship in the event of an unforeseeable circumstances beyond the participant's control. Could elderly care expenses apply in this situation and how would the amount be determined (expenses for 12 months, etc.)?

Thanks for any opinions.

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Guest wmacdonald

[[/b] Many plans allow participants an opportunity to withdraw or take a payout of funds to meet an unforeseeable financial emergency. The IRS ruling position allows for these if the events are truly unforeseen, a much tougher standard than the safe harbor position applicable to 401 (k) plans. NQDC committees, who normally make the decision, have to determine if the event is a "unforeseeable financial emergency".

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