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Question: My client participates in a 403b plan, and has a designated Roth account. If she takes a hardship withdrawal, will she be suspended from contributing to the plan for six months?
Answer: Yes, if the plan is governed by a prototype document as many of them are.
The six month suspension of contribution rule from a 403b account after a hardship withdrawal is generally an administrative requirement. However, if a plan is a safe harbor plan—and plans using a prototype document generally are safe harbor plans—the six month suspension does apply by IRS rule after any hardship withdrawal, whether from regular or designated Roth 403b account.
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The plan document will say for sure whether a suspension is required.
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