Under what circumstances can hardship distributions be made from a 401(k) plan?

Hardship distributions from a 401(k) plan are governed by specific criteria set forth by the IRS. These distributions can only be made to address immediate and heavy financial needs that meet certain requirements. The IRS specifies what constitutes such needs, which include expenses like medical bills, purchasing a primary residence, tuition and educational fees, and preventing eviction or foreclosure on a primary residence.

This framework ensures that hardship distributions are reserved for pressing situations that truly necessitate accessing retirement savings early. While employees may have personal financial challenges, only those that fall within the IRS definition of an immediate and heavy financial need qualify for hardship distributions.

The other options do not align with IRS regulations on hardship distributions. They suggest broader or different criteria that do not fit within the legal framework, thus emphasizing why option B is the correct choice in terms of understanding the parameters around hardship withdrawals from a 401(k) plan.