Unlocking Your 401(k): Navigating Hardship Distributions Your 401(k) plan can allow early distributions from an account for financial hardship. The regulations leave it to the discretion of plan administrators as to whether to allow hardship distributions. But if a plan allows it, the distribution must meet certain minimum requirements. The distribution must be made to meet an “immediate and heavy financial need.” The regulations specify certain events that meet this standard: expenses for certain medical care, costs related to the purchase of a home for the employee, tuition expenses for post-secondary education for the employee’s family, payments to prevent eviction, payments for funeral expenses, and expenses related to a natural disaster. This is not an exclusive list, and whether a distribution qualifies as a hardship distribution will depend on the facts and circumstances. But the law does allow a plan administrator to rely on an employee’s representation that a distribution is a hardship distribution. #kimandrosadollp #taxlawyer #tax #401k #hardshipdistribution
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