"I've got a hardship request for a casualty issue where the participant says that he and his buddies have the skills required to do the work themselves, but they need the hardship to cover the costs of the materials, and, hey, why shouldn't he be able to compensate his buddies for their time, too? OK, the materials I can see, but the rest of this is sounding alarm bells....

Assuming that the Plan Administrator wants to approve this as a true casualty situation hardship, is a fair recommendation to suggest that the participant get an estimate from a licensed contractor and use that for the hardship distribution amount? Technically, once the amount is paid to the participant, it's not on the Plan Administrator to ensure that the money is used for that purpose, anyway, but if the participant wants to do the job with his friends and pay them instead, as long as the amount isn't unreasonable (which is what the bona fide estimate is going to be used to substantiate), isn't the plan on solid ground?"