IRS HARDSHIP EMERGENCY WITHDRAWAL INFO

UNFORSEEABLE EMERGENCY WITHDRAWALS FROM YOUR 457 PLAN

While Pro Benefits Group, Inc. is  not the administrators of your plan, we try very hard to assist those who meet IRS guidelines under a "prudent planning rule" in making a hardship withdrawal from their policy.  Please keep in mind that me must adhere to the Internal Revenue rules in all withdrawal applications.  If Advanced Consulting Group, Inc. is the Plan Administrator, please feel free to contact them at www.acgiserve.com.

 

The IRS defines an unforseeable emergency as follows under Section 457 Plans(rules are slightly different under Section 403(b)):

  • A Severe financial hardship to the participant resulting from an illness or accident suffered by the participant, a spouse, a dependent, or a designated beneficiary
  • A loss of the participant's property due to casualty, or
  • Other similar extraordinary and unforeseeable circumstances caused by events beyond the participant's control

Keep in mind: Distributions because of an unforeseeable emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay income taxes or penalties relating to the withdrawal). Distributions may not be made to the extent the emergency may be relieved through reimbursement from insurance or otherwise, by liquidation of the participant's assets (to the extent liquidation would not itself cause severe financial hardship), or by cessation of deferrals to the plan.  In addition, distributions may not exceed 50% of the available account value.

IRS regulations provide the following examples of an "unforeseeable emergency":

  • The need to pay medical expenses, including non-refundable deductibles and the cost of prescription drugs
  • The cost of rebuilding a home following damage not covered by homeowner's insurance (for example, following a natural disaster)
  • The imminent foreclosure or eviction from the participant's principal residence
  • The need to pay funeral expenses of a spouse or tax dependent

The purchase of a home and the payment of college tuition are generally not unforeseeable emergencies.

General Distributions from a Section 457 Plan are as follows:

Distributions may also be made from a 457(b) plan

  • Upon the participant's death
  • Upon plan termination
  • If the plan contains a "small benefit" rule allowing distribution of account balances less than $5,000 (excluding rollover amounts) where the employee has not contributed to the plan for at least two years. The plan may provide for automatic cash out of these amounts, or may allow the distribution at the request of the participant.
  • If the plan accepts rollover contributions from an employer-sponsored qualified retirement plan, 403(b) plan, or IRA, separately accounts for those rollover contributions, and contains a provision allowing the distribution of those rollover dollars at the participant's request. See Revenue Ruling 2004-12.
  • Loans are also available in most plans in Arkansas subject to IRS limitations and repayment terms.

Pro Benefits Group, Inc. is proud to continue in a partnership with education in Arkansas, Texas, Georgia and Florida. Our corporate partnership with education allows us to to participate with the people making the greatest contribution to American history, "Professional Educators". We not only work in education, but education is our life! Giving back to education involves supporting organizations made up by educators. It is our way of making a difference beyond products and services. If your career is in education, you represent a powerful force in shaping the minds of tomorrows leaders. We at Pro Benefits Group are proud to help support education by participating as corporate sponsors in multiple events throughout our great nation. We continue to pray for our the leaders of school districts as well as all our great teachers who lead our youth to their futures in the classrooms.

Thank You for allowing us to play a role in your futures!



Gary Kandlbinder, President
PBGroup, Inc.