Megan and John just found the perfect house and want to purchase it. However, they lack the necessary funds to do so. What may this event trigger in regards to their 403 (b) plan?

Question

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An employee who wishes to purchase a house may trigger the "hardship withdrawal" within their 403 (b) plan. The "hardship withdrawal" may be triggered by medical care for the participant or dependents, to purchase a principal residence, tuition or related education fees, and the prevention of eviction or foreclosure; however, all other options must be exhausted. There will be a 10 percent penalty, distribution will be taxed as ordinary income, and a six-month blackout exists on elective deferrals after a hardship withdrawal.

Megan and John Just Found the Perfect House and Want