If available in your plan, a hardship distributions can only be taken when there is an immediate and heavy financial need that cannot be satisfied by other means. Not all plans offer hardship withdrawals. Check your Plan Highlights on https://www.MyPlanConnection.com to see if your plan allows hardship distributions.   Please note:  The IRS assesses a 10% penalty for early withdrawals (prior to age 59 1/2). You should consult a tax advisor for specific questions regarding tax implications of withdrawals from your plan. 


Important Information regarding Hardship distributions:


Hardships are only eligible for specific "safe harbor" reasons. Eligible “safe harbor” hardship reasons are:

  • Medical expenses for you, your spouse or dependents;
  • Purchase of a principal residence (the residence that is listed as the principal residence on your Form 1040);
  • Tuition and related expenses for the next 12 months for you, your spouse or dependents for secondary school education 
  • Payment to prevent eviction or foreclosure from your principal residence;
  • Funeral expenses for your parents, spouse or dependents 
  • Repair of your principal residence as a result of catastrophic “act of God” loss, such as a hurricane or flood 


In order to qualify for a hardship distribution, you will need to complete a hardship distribution form and provide supporting documentation to substantiate the hardship request. The requested distribution amount cannot exceed the amount documented; however, your distribution amount can be increased by the amount of your expected taxes (i.e. 10%).


After you have submitted your request, please be sure to monitor your emails for important next steps to complete your transaction. Supporting documentation may be sent through our secure portal by clicking here. Upon receipt of your documentation, your request will be reviewed and approved/rejected by your Plan Administrator.



Eligible Expenses and Required Documentation:

*Some plans may require a self-certification form in lieu of additional documentation.



Medical Expenses:

  • Eligible Expenses:  Treatment by licensed medical professional, hospital treatment, prescription drugs, and some dental procedures
  • Documentation:  Medical bills or estimates for expenses not covered by insurance, insurance statement indicating expenses not covered.  "Balance due" bills are not sufficient, an itemized bill showing insurance/no insurance payments is needed.


Purchase of Principal Residence

  • Eligible Expenses:  Costs directly related to the purchase or construction of a primary residence including building materials and closing costs but excluding mortgage payments.  Participant's name must be on sales contract.
  • Documentation:  Copy of estimated settlement costs, a good faith estimate or sales contract; if building a home a government issued building permit. Closing date MUST BE IN THE FUTURE to qualify.


Tuition and Educational Expenses for Secondary Education

  • Eligible Expenses:  Tuition, lab fees, technology fees, room and board provided by the school. Student loan payments and travel expenses are not covered.  Must be for upcoming semester, not classes already attended or payments on student loans. Secondary education only. Payment on student loans does not qualify.
  • Documentation:  Copy of applicable bill


Payment to Prevent Eviction or Foreclosure

  • Eligible Expenses:  expenses to prevent eviction or foreclosure like rent, mortgage payments, and late fees.  Does not include attorney fees.
  • Documentation:  An eviction notice, a notice of foreclosure, a notice to vacate premises or a signed letter from a landlord.  Statement must be dated within past 60 days and must be clear that eviction or foreclosure will result without payment.  The foreclosure or eviction date MUST BE IN THE FUTURE to qualify.


Funeral Expenses

  • Eligible Expenses:  All fees associated with the service, burial or cremation. Does not include travel expenses. 
  • Documentation:  Invoice from funeral home, cemetery, or religious institution


Principal Residence Repair

  • Eligible Expense:  Repairs to a principal residence must fall under the IRS's description of a casualty loss in order to qualify for a hardship withdrawal. The damage must be from an event that is sudden, unexpected, or unusual. Damages resulting from progressive deterioration of your residence due to normal wear and tear, normal weather conditions, or a pest infestation are not considered casualty losses.
  • Documentation:  Estimate or invoice from the company repairing the residence noting that the damage was caused by the recent storm.


Any tax advice contained in this communication (including any attachments) is neither intended nor written to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend to anyone a transaction or matter addressed herein. BlueStar Retirement Services, Inc. This bulletin is published as a general informational source. This information is general in nature and is not intended to constitute legal advice in any particular matter. BlueStar Retirement Services, Inc. does not warrant and is not responsible for errors or omissions in the content of this report.