What are safe harbor reasons for hardship withdrawal?

Under a “safe harbor” in IRS regulations, an employee is automatically considered to have an immediate and heavy financial need if the distribution is for any of these: Medical care expenses for the employee, the employee’s spouse, dependents or beneficiary.

Can you take a hardship from safe harbor contributions?

Under the new regulations, a 401(k)-plan sponsor can allow hardship withdrawals from accounts holding QNECs, QMACs, elective deferrals, QACA safe harbor contributions, traditional safe harbor contributions, and all earnings present in these accounts.

What is a safe harbor hardship?

Under the deemed safe harbor rule, a hardship distribution is automatically considered to meet both criteria of immediate and heavy financial need and necessary to satisfy the financial need if made for expenses related to any of the following. Medical. Principal residence purchase. Education.

What qualifies for a hardship distribution?

A hardship distribution is a withdrawal from a participant’s elective deferral account made because of an immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need. The money is taxed to the participant and is not paid back to the borrower’s account.

When can you withdraw safe harbor?

age 59 ½
The IRS’ distribution rules for safe harbor 401(k) employer contributions are different (more restrictive) than those for non-safe harbor 401(k) plans. The soonest that a working participant would be able to request a withdrawal of safe harbor 401(k) employer contributions would be age 59 ½.

Does the IRS verify hardship withdrawal?

IRS: Self-Certification Permitted for Hardship Withdrawals from Retirement Accounts. Employees no longer routinely have to provide their employers with documentation proving they need a hardship withdrawal from their 401(k) accounts, according to the Internal Revenue Service (IRS).