The government is concerned about the problem of leakage from employer-provided retirement plans, and hardship withdrawals (along with unpaid loans) are a big sources of leakage.
Now, it appears the Department of Labor and IRS may be cracking down on plans that do not follow strict requirements for authorizing permitted hardship withdrawals.
This creates an opportunity for advisors to help plan sponsors review plan document language and procedures in this area. A useful starting point is an IRS FAQ: www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Hardship-Distributions
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