What is the name of your state (only U.S. law)? Pennsylvania
I am trying to withdraw funds from my 401k through my employer for a home purchase. I requested and received a hardship withdraw form from the company, dated 7/22/2010. I had the option of submitting a purchase contract OR Good Faith Estimate OR builders contract as proof of qualifying for the penalty-free early withdraw. I chose to submit the good faith estimate, since only 2 pages. All criteria required on the good faith estimate were met without question. I submitted forms, and when I called back today to check its status, I was told it was denied because the good faith estimate can no longer be accepted as a standalone document. I was told that as of 7/1/2010, the IRS now requires a good faith estimate AND the purchase contract, despite what it says on the hardship withdrawal form, dated 7/22/2010, which reads either one "OR" the other. Not both. Now you might say, well just send them the purchase contract too... and I would but the problem is the purchase contract is 6 weeks old. They only accept documentation within the past 30 days. And you can't exactly get a purchase contract re-signed and re-dated. It is a legally binding contract between buyer and seller and witnesses, and those changes aren't legally possible.
So since I only have a GFE that is dated in last 30 days, that's all I have that they will accept. So I did some extensive research on the IRS tax law changes and for any requirement changes with regard to 401k hardship withdrawals. I have found nothing. Zip. The company holding my 401k insists it is an IRS law change governing required documents of 401k withdrawal. Could it just be the company has made requirement changes on their own (in which case they should honor the documentation they sent me as good enough - since the form is dated AFTER they apparently made the requirement changes) or is there actually an IRS tax law change that now requires more than just the GFE as a standalone document?
If you can, in response, cite the IRS form that addresses this if it is in fact correct.