Hardship Distributions from 401(k) Plans

Summary

This practice note discusses hardship distributions (also referred to a hardship withdrawals) from a qualified defined contribution retirement plan that includes a qualified cash or deferred arrangement (CODA, as defined under I.R.C. Section 402(e)(3)) operating under I.R.C. Section 401(k) (a 401(k) plan). In-service withdrawals of elective contributions (which withdrawals can include both pre-tax contributions and Roth contributions if the plan includes a qualified Roth contribution program operating under I.R.C. Section 402A(B)) in 401(k) plans are limited by the tax rules. See Treas. Reg. § 1.401(k)-1(f)(4) for the inclusion of Roth contributions in the distribution restrictions that apply to 401(k) plans.