Purchase of land - "purchase of primary residence"???

[Guest CJK]

A 401(k) plan uses the "safe-harbors" for both purposes relative to hardship withdrawals. As we all know, one of the "safe-harbor" hardship events is the "purchase of one's primary residence." What are your thoughts relative to a participant who applies for a hardship withdrawal in order to purchase "land" on which he plans to build his primary residence in the future? I sort of remember this coming up at a conference but I am still researching and thought that maybe someone can shorten my search.

[Guest UKH]

1.401(k)-1(d)(2)(iv)(A)(2)

Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);

If the participant plans on building his principal residence right away after buying the plot of land, I do not see any problems on issuing a hardship. I would however ask for documentation to support that the construction is going to start soon on that plot of land.

However if the participant is just planning to buy the plot of land and not build his principal residence for a couple of years then I would be hesitant to issue a hardship distribution. I would then consider buying the plot of land for investment purposes than for hardship reasons.