Section 401(k), 403(b) and 457 plans may permit participants to take in-service withdrawals because of situations that result in a financial hardship. Although the requirements for distributions for financial hardship differ between 457 and 401(k)/403(b) plans, any plan that permits financial hardship distributions must apply a two-part test to the participant’s request before making this distribution:
- The Unforeseeable Emergency or hardship must create a heavy and immediate financial need that cannot be relieved or met from other sources, and
- The amount of the distribution will not exceed the amount of the financial need.
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- October 12, 2008 Create Date
- January 8, 2020 Last Updated