Hardship Withdrawal for Primary Residence

We are in the US and the employee in question works in the US.    We use the safe harbor hardship definition.  This participant was originally hired in 2017 but had two small periods of non-employment (1-3 months) before being rehired in 2019 and working uninterrupted since then.  They are applying for a hardship withdrawal to prevent eviction from their "primary residence"--which is in Australia.  I vote not to approve.  Any thoughts?

If the plan’s administrator denies the hardship claim, follow ERISA § 503 and the plan administrator’s claims procedure. That includes giving a denied claimant an opportunity to present evidence and legal argument to support one’s claim. That might include showing facts and explaining reasoning about which place is the participant’s primary residence.

If hardship claims are on a § 401(k)(14)(C) self-certifying method, does the plan’s administrator have actual knowledge that the participant’s certification is false?

Thanks for this.  We do not self-certify and the participant has presented evidence that a foreclosure is in process.  We have also verified that the participant does not own the US property in which they currently live.  The more I think about this the more ambivalent I become.

The Treasury rule sets no definition for the phrase “primary residence”.

So, unless the plan’s governing documents define the phrase, an administrator must form its interpretation, doing so with exclusive-purpose loyalty and no less prudence—including care, skill, and diligence--than ERISA § 404(a)(1) requires.

Even if one reasons that an interpretation logically consistent with Federal laws generally, or with Federal tax laws particularly, should be preferable, that reasoning might yield no obvious conclusion. The United States Code generally, and the Internal Revenue Code particularly, each has many uses of the phrase “primary residence”. And all those are for a purpose different than deciding whether a retirement plan should allow a participant to invade one’s savings before severance-from-employment.

If one interprets the § 401(k)-1 rule’s use of “primary residence” to refer to a common-law meaning, a leading dictionary defines both primary residence and principal residence as “[t]he place where a person lives most of the time.” Residence, primary residence, principal residence, Black’s Law Dictionary 1568 (12th ed. 2024).

But that one-phrase construct does not say what measure of time to look to. Is it the most recent year? The most recent five years? Ten years? One generation? A whole adult lifetime? Or the time since the most recent establishment of domicile?

A plan’s administrator might form the best interpretation it can while not incurring an unreasonable expense.

This is not advice to anyone.