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Posted

Plan permits Hardship Distributions as per safe harbor rules. Limited to 401k and Rollover sources. Terminated Participants are permitted to request (plan delays termination distribution to close of plan year in which termination occurs). No limit to Hardship requests per year. Self Certification regarding other financial sources is accepted; documentation requested to substantiate need.  "Participant must provide supporting documentation or information, which may include bills, contracts, estimates, and other information that will support the request for a hardship distribution."

Former Terminated Participant has submitted a Hardship Request indicating it is "to pay tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for me, my spouse." The substantiation provided shows two multi-day programs offered by two prestigious universities (UPenn and Harvard) and a flight/hotel accommodations quote but none are actual bills or registrations with balances due. One program is live online for 5 days (4.5 hrs per day) in December 2022 and the other is 4 days on-site June 2023. Neither reflect whether a certificate or continuing ed of some kind is provided at the conclusion of attending.

Do the above multi-day presentations qualify for "post-secondary education" hardship purposes? And, must the substantiation reflect more than just what appears to be promotional materials for upcoming programs hosted by Universities? If there is no Participant specific registration how can the Plan be certain the request is for expenses that will be paid on behalf of the Participant as documented? Finally, does it matter that one of the events is next year, albeit within "the next twelve (12)months..."?

Thank you.

Posted

Does anyone want to share any insight as to the spectrum of acceptable "post-secondary education" for Hardship purposes and ramifications to the Plan, if any, if the Participant fails to spend the money as per the Participant's representations made?

Posted

I don't think your example qualifies for a hardship no matter what the school.  As for your second post, no one will be following the participant around to make sure the money is spent as they represented. Hope that helps.  

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