The following is not meant to be legal advice.
For those working to handle a company’s 401(k), they may know that the Internal Revenue Service (IRS), issued regulations regarding the events that can qualify for a hardship distribution from a 401(k) plan. The list of permissible events now include costs directly related to the purchase of a principal residence (excluding mortgage payments); expenses for the repair of damage to participant’s principal residence that would qualify for the casualty deduction under the Internal Revenue Code.
They also include expenses for medical care (described in Section 213(d) of the Internal Revenue Code) previously incurred by the 401(k) participant, his/her spouse or dependent or necessary for him/her, his/her spouse or dependent to obtain medical care; tuition, related educational fees, and room and board expenses for the next twelve (12) months of post secondary education for the participant, his/her spouse or dependent.
Finally, IRS regulations include events on amounts necessary to prevent the participant from eviction from participant’s principal residence or foreclosure on the mortgage of participant’s principal residence; payments for burial or funeral expenses for participant’s deceased parent, spouse, children or other dependents.
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