Roth 403b qual dist Q
I’m able to find that if the plan allows for hardship distributions the participant can take distributions under those exceptions for disability and death. However what I cannot find a definite answer on is whether or not a person can take for tuition and or student loans? For example the client has been in for more than 5 years but not yet 59 1/2, wants to pay off student loans, is this an option? I know the downside if it’s not a qualified distribution is that is Pro rata but the client is looking to maximize contributions with roth 403b and possibly 457
Permalink Submitted by Alan - IRA critic on Fri, 2019-06-21 16:07
Each plan determines what qualifies as a hardship distribution and student loans are not considered to meet the immediate need criteria. Rather, the retirement bills in each house of Congress include provisions to allow a plan to make matching contributions for elective deferrals an employee does not make due to making student loan payments. This has already been approved by an IRS PLR, but there is major support for tax code authorization of this matching feature. In other words, the company would effectively be subsidizing the loan repayments. Perhaps since these bills have bipartisan support and a good chance of passage, the client should track these bills and wait until they become law.