In general, a financial hardship situation is one that forces you to either decide between meeting basic living expenses or paying your bills. To prove this, a creditor requires information about your income and expenses. Pay stubs or a W-2 Wage and Tax Statement. Income tax returns for the past one-to-three years.

What are hardship reasons?

But, there are only four IRS-approved reasons for making a hardship withdrawal: college tuition for yourself or a dependent, provided it’s due within the next 12 months; a down payment on a primary residence; unreimbursed medical expenses for you or your dependents; or to prevent foreclosure or eviction from your home.

What are hardship supporting documents?

Documentation of the hardship application or request including your review and/or approval of the request. Financial information or documentation that substantiates the employee’s immediate and heavy financial need. This may include insurance bills, escrow paperwork, funeral expenses, bank statements, etc.

Can a hardship withdrawal be made for home repairs?

But because you need the cash for home repairs caused by storm damage, you may qualify for a hardship withdrawal. The rules for hardship withdrawals vary widely from plan to plan. Some plans don’t allow them at all.

When does an expense not qualify for hardship?

It is important to note that if the expense is subject to reimbursement by an insurance company at a later date, it does not qualify as a hardship even if the participant is required to make payment up front and await reimbursement. Costs related to the purchase of a principal residence.

What makes a person eligible for a hardship withdrawal?

Payments for burial or funeral expenses for your deceased parent, spouse, children or other dependents. Expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under the Internal Revenue Code.

Are there any retirement plans that allow 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.