Are hardship distributions from salary deferral accounts and profit sharing accounts now treated the same - they are not eligible rollover distributions and therefore no mandatory withholding.

I believe at one time they were different.

I don't ever recall them being treated differently. No rollover and taxable to participant with possible penalty. IRC 402©(4)©

I recall this change occurred with EGTRRA. Pre-EGTRRA hardships from non-deferral sources of money were eligible rollover distributions.

They were never different (salary deferral vs. PS) for purposes of rollover. Hardships (in general) were eligible for rollover before RRA 98.


[Wrong! Note correction in later post.]

Prior to RRA 98, hardships were eligible for rollover from any source of money for the most part (had to be a single sum distribution, which was generally not an issue).

§6005©(2) of RRA 98 amended IRC §402©(4)© effective in 1999 to say that hardship withdrawls from 401(k) elective deferrals and 403(b) deferrals were ineligible for rollover. Hardship distributions from other sources (i.e. profit sharing) were still eligible for rollover.

§636 of EGTRRA amended IRC §402©(4)© effective in 2002 so that no hardship distributions are eligible for rollover.

That's what I was remembering that I didn't remember! 99 to 2002 they were different. Thanks

I stand corrected!