“Do the Experts have a list of the types of expenses for which distributions are deemed to be made on account of an immediate and heavy financial need for our 403(b) plan under the hardship withdrawal rules? I have read different sources that list different expense types.”

Charles Filips, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

Certainly! By way of background, hardship distributions from a 403(b) plan are subject to the 401(k) rules on hardship distributions. Under the 401(k) rules, hardship distributions are permitted when an employee has an “immediate and heavy financial need” and the distribution is necessary to satisfy the financial need. The regulations identify seven types of expense categories that may constitute an immediate and heavy financial need:

1) Expenses for (or necessary to obtain) medical care that would be deductible under Internal Revenue Code Section 213(d), determined without regard to the limitations in IRC Section 213(a) (relating to the applicable percentage of adjusted gross income and the recipients of the medical care) provided that, if the recipient of the medical care is not listed in IRC Section 213(a), the recipient is a primary beneficiary under the plan;

2) Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);

3) Payment of tuition, related educational fees and room and board expenses,...

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