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A retirement plan may, but is not required to, provide for hardship distributions. Many plans that provide for
elective deferrals provide for hardship distributions. Thus, 401(k) plans, 403(b) plans, and 457(b) plans may
permit hardship distributions.
If a 401(k) plan provides for hardship distributions, it must provide the specific criteria used to make the
determination of hardship. Thus, for example, a plan may provide that a distribution can be made only for medical
or funeral expenses, but not for the purchase of a principal residence or for payment of tuition and education
expenses. In determining the existence of a need and of the amount necessary to meet the need, the plan must
specify and apply nondiscriminatory and objective standards. (Reg. §1.401(k)-1(d)(3)(i))
The rules for hardship distributions from 403(b) plans are similar to those for hardship distributions from 401(k)
plans.
If a 457(b) plan provides for hardship distributions, it must contain specific language defining what constitutes a
distribution on account of an “unforeseeable emergency.” (Reg. § 1.457-6(c)(2))