Do natural disasters qualify as an event that triggers a hardship withdrawal? Not unless the plan specifies these circumstances or unless the government passes some emergency legislation. Also, plans may be able to amend their documents to accommodate participants hit hard by “super storm” Sandy.
While most experts advise against using 401(k) plans for emergencies, with delays in insurance recoveries expected and many homeowners not covered by flood damage, there may not be many viable alternatives. The worst case scenario would be participants who are forced to pay the early withdrawal penalties and taxes. Read more here.
