Rollovers and Distributions

[Guest Kimberly Hlavacek]

I have a situation where a participant just recently rolled money into his current employers 401(k)plan. He was planning on using some of the money for a down payment on a new house. His current employers plan does not allow for loan. Is there anyway that he can take a distribution? The employer does not want to amend the plan to allow for loans.

Any thoughts on this would be greatly appreciated.

[wmyer]

It depends on the plan. Some plans allow hardship withdrawals for non-401k assets...this may be an option because the individual is buying a house. Alternatively, some plans allow in-service withdrawals, for example if the participant is over 59 1/2.

[Guest Kimberly Hlavacek]

Unfortunately, the employee is not over 59 1/2 so the in-service withdrawal is out and the plan does not provide for a hardship of non 401(k) assets.

[RCK]

Doesn't the plan allow for in-service distribution of rollover amounts? If not, I'd consider adding it. That would certainly solve your problems--gives the employee access to his money, does not create a policy that the employer can't live with, and is philosophically sound (the employee rolled the money in solely based on their own preferences--let them take it out whenever they want).