Hardship distribution for Terminated Participant

[Guest Tracy H]

Can a terminated participant take a hardship distribution? Not exactly why you want to..but I haven't been able to find anything.

[rcline46]

They are still a plan participant and if the document allows hardships, then you must give it if meets the rules for hardships. Its loans that are less likely to be available.

[RCK]

I'm not sure why they'd want jump through the hoops and limits of proving a hardship when they could take a total distribution, and split it as they wanted between cash and rollover.

[wmyer]

One of the qualifications for taking a hardship under the 'safe harbor' test is that the participant must make all other kinds of permitted withdrawals and loans first. I therefore understand that if the participant is terminated and hence eligible to take a distribution, they may not take a hardship withdrawal.

[MJ Hartman]

my advice is to review the plan document. many times there is an option in the prototypes to elect hardship distributions available to terminated participants. this might be the case if there is a time requirement for distributions to terminees; ie a one or five year break in service prior to distribution. again this should be outlined in the document somewhere.

[Alf]

Great point by W. Myer, so the answer is probably no, but I can think of a few situtations where a former employee may not be entitled to receive a distribution (same desk rule or the employer has not adopted the safe harbor hardship standards).

[Guest runaround]

Can the plan administor adopt the same desk rule for terminated employees and disallow distributions from the plan even though it is clear that the same desk rule does not apply? My scenario: I have termnated from my employer and accepted a position with a company that has a construction contract with my previous employer. The contract included only the sale of vehicles to my new employer and is far less than 85% of the companys assets also the contract provides leased space for the some (not all) of the employees working on this contract. The job that I left is still intact and is being performed by an employee of my previous employer, yet I am being denied the right to transfer my 401k from my previous employer. I was trying to transfer the account for down payment on my first time home. Additionally, my previous employer had told me when inquiring of the tranfer of funds that this was possible. They knew that the purchase of this home hinged on having access to said funds. I was notified that the transfer could not take place on the day that the transfer was to occur, even though I had been in contact with the Plan Administrator throughout this process. Can anyone provide me with information that would allow me to access my funds??