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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I'm 51 years old and looking to take a 401K hardship withdrawal.

Customer Question

I'm 51 years old and looking to take a 401K hardship withdrawal. This is based on a medical need to relocate my elderly mother from another state to live with me in my state. Her doctor is in agreement and will draft a letter stating her need to relocate is urgent. The withdrawal is in hopes to help pay for relocation expenses of her household. She needs to stay with me due to being on a fixed income & unable from time to time to tend to her medical issues due to recurring health problems. She was also unable to evacuate herself during the Texas disastrous flooding in June. Her current living arrangements will end soon due to the elderly woman she is staying with now needs to sell her home & go live with her kids.
I am my mother's only child and the only immediate family who can help her. This relocation is planned for Sept-Oct 2015. Due to it being late in the year, I will not be eligible to claim her as a dependent & deduct her moving expenses this tax year.
My question is, does the IRS recognize relocation expenses of a parent to live with me as legitimate medical expenses that fall under their criteria of a 401K hardship withdrawal?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
A retirement plan may, but is not required to, provide for hardship distributions. So for distribution criteria - you woudl need to contact your plan administrator and not the IRS.According to IRS Reg. §1.401(k)-1(d)(3)(i) - If a 401(k) plan provides for hardship distributions, it must provide the specific criteria used to make the determination of hardship. For a distribution from a 401(k) plan to be on account of hardship, it must be made on account of an immediate and heavy financial need of the employee and the amount must be necessary to satisfy the financial need.Generally, if a 401(k) plan provides for hardship distributions, the plan will specify what information must be provided to the employer to demonstrate a hardship. So again - that is based on specific language in your 401k plan documents.But generally - based on your information - you should be allowed 401K hardship withdrawal based on common criteria - but woudl need to confirm that with your plan administrator.