Economic Hardship Distribution Rules

In what instances may a participant take a hardship distribution from their retirement account?

If the Plan allows for in-service distributions, a hardship distribution must be due to an immediate and heavy financial need.  In addition, the applicant must document that all other sources of funds have been exhausted.  The criteria for a hardship distribution are limited to the following:

1.  Medical Expenses incurred or expected to be incurred by the employee, spouse or dependent. (Note: Must be documented)

2.  Purchase of a Principal Residence for the employee.

3.  Payment of Tuition for the next twelve months for post-secondary education for the employee, spouse, children or dependents.

4.  Expenses to Prevent Eviction or Foreclosure relating to the employee's principal residence.

5.  Payments for Burial or Funeral Expenses for the employee's deceased parent, spouse, children or dependents.

6.  Expenses for the Repair of Damage to the Employee's Principal Residence.  The damage must qualify for the casualty loss deduction under IRC Section 165.

There are several additional rules regarding hardship distributions.  Please contact your PPA administrator regarding hardship distributions.