I need clarification please on the rules related to hardship distributions from 457 plans. What are the requirements and where do I find them? I've read Reg. 1.457-2(h) where it talks about "unforseeable emergency". In particular, is a participant that receives a hardship distribution required to stop making deferrals for a 12 month period, as in a 401(k) plan?

The "unforeseeable emergency" rules of section 457(B) are actually tougher than the "hardship" rules of 401(k) and 403(B). For example, payment of college tuition or purchase of a principal residence could give rise to hardship distributions from a 401(k) or 403(B) plan, but would not be treated as an unforeseeable emergency in the case of a 457(B) plan.

In the case of a 401(k) plan, the participant is not actually required to stop making deferrals. Rather, cessation of deferrals is treated as a safe harbor with respect to the requirement that the participant not have other resources to meet whatever immediate and heavy financial need the participant has. No such safe harbor exists in the case of a 457(B) plan.

Thanks Carol. If I understand you correctly then, there is no safe harbor for the 457(B) hardship withdrawals and no requirement for cessation of deferrals for any length of time.

That's the way I read it.