In-plan Roth conversion

Typically, if the plan allows, deferrals and Roth plus earnings are available for hardship distribution.  

We have someone asking if they can do a Roth conversion of profit sharing for example.  I don't think that then qualifies as a "safe harbor" hardship source - does it?  I realize they could amend the plan for in-service on profit sharing at 60 months or 2 years aged deposit.

I believe you can make any source eligible for ROTH conversion, though I think it does have to be 100% vested to convert. However, you do have to preserve the pre-ROTH characteristics (such as distribution timing) of the funds being converted so you'll likely need to track a separate ROTH source for each source of funds that is converted to ROTH.

Agreed, I think Roth conversion changes the current and future taxability features of the converted amounts but does not change the money type and characteristics.