30Rock Posted June 3, 2024 Posted June 3, 2024 Can an ex spouse take a hardship withdrawal to buy out her ex husbands share of their primary residence home? thanks!
Peter Gulia Posted June 4, 2024 Posted June 4, 2024 Is buying out the former spouse “[c]osts directly related to the purchase of a principal residence for the [participant]”? 26 C.F.R. § 1.401(k)-1(d)(3)(ii)(B)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(k)-1#p-1.401(k)-1(d)(3)(ii)(B)(2). Is buying out the former spouse “necessary to prevent the eviction of the [participant] from the [participant’s] principal residence”? Is buying out the former spouse “necessary to prevent . . . foreclosure on the mortgage on [the participant’s principal] residence”? 26 C.F.R. § 1.401(k)-1(d)(3)(ii)(B)(4) https://www.ecfr.gov/current/title-26/part-1/section-1.401(k)-1#p-1.401(k)-1(d)(3)(ii)(B)(4). Bill Presson 1 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Peter Gulia Posted June 4, 2024 Posted June 4, 2024 If claims for a hardship distribution are processed under a § 401(k)(14)(C) certification, a claimant might believe, in her circumstances, that buying out the former spouse’s interest in the participant’s principal residence fits one (or more) of those deemed-hardship situations. And a plan’s administrator might not “ha[ve] actual knowledge to the contrary of the employee’s certification[.]” Luke Bailey 1 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Popular Post Adi Posted June 4, 2024 Popular Post Posted June 4, 2024 As support, here's a snippet from the 2004 ABA Q/A with the IRS: 19. §401(k) – Hardship Distributions A participant wants to know if the purchase of principal residence qualifies as a hardship if she is using the proceeds to 'buy out' the equity on her current home from her ex-spouse? Proposed response: Yes, because the dwelling is her principal residence and she is purchasing an interest in it that she didn’t own before. IRS response: The IRS agrees with the proposed answer. The participant is purchasing a part of her principal residence. ERISA guy, ugueth, Luke Bailey and 3 others 5 1
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