As the business world migrates toward a paperless environment, it has been steadily pulling retirement plan administration in its wake. One area of focus for paperless administration in recent years has been 401(k) plan hardship withdrawals. Some third-party administrators (TPAs) have devised and marketed systems for e-certified hardship withdrawals, which effectively transfer the burden to participants to verify the existence of a qualifying hardship and maintain any records needed to support such verification.
These programs typically require a participant to electronically confirm
- the nature of the hardship;
- the person experiencing the hardship and his or her relationship to the participant;
- the existence of specified documents required to support and substantiate the request;
- the unavailability of other specified resources to meet the hardship; and
- the amount of the hardship, which must equal or exceed the amount of the request.
The participant has to electronically certify the truth and accuracy of his or her statements and commit to retaining the required support documentation for a specified period of time.