Eligibility for Hardship Distribution

We have a participant requesting a Hardship distribution based on:

Yes I am backed up on my bills specially my mortgage, car payment and daycare 

I'm probably overthinking this, but I don't believe it falls under the IRS Hardship rules.  I just wanted to confirm

Thanks everyone!

Has the plan document been amended or has the plan sponsor made an administrative decision to adopt later the provision to permit a participant to self-certify that a they have a hardship?

Does the plan administrator have actual knowledge that the participant's need does not meet any of the hardship conditions?

Are you the plan administrator with the fiduciary authority to make the decision to accept or reject the request for a hardship?

There has been a significant shift in the role of the plan administrator with respect to responsibility to determine if a participant has access to their accounts due to hardship.  You may want to have answers to these questions before making a decision.  (If the responses in order are no, yes, yes, then likely it is your call.)

1 hour ago, Paul I said:

Has the plan document been amended or has the plan sponsor made an administrative decision to adopt later the provision to permit a participant to self-certify that a they have a hardship?

Self-certification is only good as long as the employer has no knowledge to the contrary.  The quip cited by metsfan would , to me, be "knowledge to the contrary" that a hardship condition doesn't exist.....

21 minutes ago, MoJo said:

Self-certification is only good as long as the employer has no knowledge to the contrary.  The quip cited by metsfan would , to me, be "knowledge to the contrary" that a hardship condition doesn't exist.....

Yea I agree. If the Participant magically discovers a reason that does qualify for hardship, it would be a good idea to document that.

Their mortgage woes could qualify.  A hardship can be taken to prevent foreclosure and/or eviction.  While that is usually a little more severe than just "being late", maybe the loan holder can issue a statement that $X is overdue and foreclosure proceedings are imminent.  The plan sponsor may feel that is enough to allow a hardship for $X.

Unfortunately, the $Y needed for car payments and daycare won't satisfy the IRS safe harbor hardship rules.

As an aside, these are the situations that Congress thinks it is solving by adding in the Employee Emergency Distribution and the PLESA.  EEP, maybe, but if they really think that participants are going to fund a 'rainy day account'... 

Have you notified his spouse of his request for a hardship distribution? Or to get his/her consent?  Does the Plan require you to do so.