Can governmental 457(b) money be withdrawn in the case of “extreme financial hardship” or “unforeseeable emergency”?
Generally, funds may be withdrawn in the case of “extreme financial hardship” or in the event of an “unforeseeable emergency.” This right is subject to the employer’s plan rules specified in the plan document. An unforeseeable emergency must be defined in the plan as (1) a severe financial hardship of the participant that results from illnesses or accidents of the participant, their spouse or a dependent, (2) the loss of the participant’s property due to casualty, or (3) other similar extraordinary and unforeseeable circumstances that arise as a result of events beyond the participant’s control. Examples of extraordinary and unforeseeable circumstances include the imminent foreclosure of, or eviction from, a primary residence or the need to pay for medical or funeral expenses. However, educational expenses are not unforeseen, so are not included.
