What is a hardship distribution?
A hardship distribution is a withdrawal that meets one of the four IRS definitions of financial hardship: • To purchase a primary residence • To prevent foreclosure or eviction from a primary residence • To pay unreimbursable medical expenses • To pay post-secondary tuition for a member of your immediate family You must be a current employee to take a hardship distribution, and you will be suspended from contributing to the plan for six months following this type of distribution. You will receive no employer matching contributions during your suspension.
A hardship provision, if included in your plan, allows you to receive a distribution under certain qualifying reasons. All other options, including a 401 (k) loan, must have been exhausted before a hardship distribution would be approved. In addition, the plan Trustee must give consent for the hardship.
