Is cosmetic surgery an eligible 401(k) hardship withdrawal medical expense? | 401k Questions

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Asked 10/26/2009

Is cosmetic surgery an eligible 401(k) hardship withdrawal medical expense?

A participant has requested a hardship withdrawal for cosmetic surgery related to facial cancer. Is this an eligible medical expense for a hardship withdrawal?

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Answer 1/2 - Submitted 10/26/2009

Any unpaid medical bill for the participant, spouse or dependant is eligible for Hardship withdrawal under the medical reason..
It must be an unpaid bill, so it can't be prior to the surgery... but the administrator cannot pick or choose the reasons for the bills that can be approved.

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Answer 2/2 - Submitted 10/26/2009

For tax purposes, however, a "hardship" distribution may still be subject to a 10% penalty if you are under age 59 1/2 (in addition to regular income tax). Your deductible medical expenses would have to exceed 7 1/2% of your income before you could begin to eliminate the penalty ... since this sounds like reconstructive cosmetic surgery, it would probably count towards that 7 1/2.

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