Retirement plans that permit participants to make elective deferral contributions, including 401(k), 403(b), and 457(b) plans, may allow participants to take an in-service distribution of their elective deferral contributions because of financial hardship.

401(k) plans may, but are not required to, provide for hardship distributions. If a 401(k) plan provides for hardship distributions, it must provide for the criteria used to make the determination of a hardship. In determining the existence of need and of the amount necessary to meet the need, the plan must specify and apply nondiscriminatory and objective standards.

On September 19, 2019, the Treasury Department and Internal Revenue Service issued final regulations that amend the rules governing hardship distributions from the Internal Revenue Code (Code) Section 401(k) Plans.

This Hardship Distribution Toolkit provides several continuously maintained resources designed to help plan sponsors comply with the hardship distribution rules.