The IRS issued final regulations under Code Section 403(b) that became effective January 1, 2009. To comply with the final regulations, the University made some changes to the hardship distribution provisions under the University of Illinois Supplemental 403(b) Retirement Plan.
Hardship Distribution Changes Effective January 1, 2009
· Hardship distributions are available only through Fidelity. For a TIAACREF participant, hardships will be available to the participant by transferring his or her plan investments to Fidelity.
· There is a limit of one hardship distribution within a six month period.
· Hardship events are limited to IRS approved safe harbor events and require supporting documentation before a hardship distribution can be made to a participant. The IRS safe harbor events are:
o Expenses for certain types of medical care for the employee, his or her spouse, children or tax dependents.
o Costs directly related to the purchase of a principal residence.
o Payment of tuition, related educational fees, and room & board for up to 12 months of postsecondary education for the employee, his or her spouse, children or tax dependents.
o Payments necessary to prevent eviction from the employees principal residence or mortgage foreclosure on that residence Payments for burial or funeral expenses for the employees parent, spouse, children or tax dependents
o Expenses for the repair of certain types of damage to the employees principal residence.
Employees can learn more about hardship distribution processing by viewing https://nessie.uihr.uillinois.edu/pdf/benefits/hardshipprocessflow01012009.pdf.