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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.

Here’s a link to a discussion on this topic:

http://benefitslink.com/boards/lofiversion/index.php/t25671.html

The plan document will say for sure whether a suspension is required.

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