Can an inactive participant (an employee who is out of work due to temporary disability and who will be returning to work next month) take a hardship distribution, or does their "inactive" status preclude such a distribution?

Try looking at your plan document to see if it addresses the issue. Our plan permits any participant regardless of status to take a hardship distribution. Of course, they must qualify for a hardship distribution under the rules of our plan - being on disability in and of itself would not automatically make them eligible for one.