A Guide to Your Individual Account Plan

Hardship Withdrawal

Under certain extreme cases of immediate and heavy financial hardship, you may be eligible to withdraw a portion of your Individual Account. There are two types of occurrences approved by the Trustees for this benefit: (1) an immediate and heavy financial hardship resulting from unreimbursable medical expenses incurred by you or your dependents; (2) an immediate and heavy financial hardship that will cause you to suffer eviction from or mortgage foreclosure on your princiaple residence.

The Trustees urge you to use this provision only as a last resort. The Individual Account Plan is a retirement plan, and having distributions made to you prior to your retirement are counter-productive to the intent of the Plan. Furthermore, a Hardship Withdrawal distribution is fully taxable to you.

Documentation of Hardship

In order to receive a Hardship Withdrawal, you must provide a written statement specifying the nature of the immediate and heavy financial need and stating that you lack other financial resources available to you to meet the financial need. The Plan may rely on representations from you concerning the need and lack of other available resources unless the Plan has actual knowledge to the contrary.

A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Participant only if:

a. You have obtained: (i) all distributions you could otherwise be eligible to receive under any other plan maintained by the your Employer other than a Hardship Withdrawal from this Plan, and (ii) all nontaxable loans under any other plans maintained by the your Employer.

b. All plans maintained by your Employer provide that your elective deferrals and employee contributions, if any, will be suspended for 6 months after receipt of the hardship distribution of elective deferrals.

c. The distribution is not in excess of the lesser of: (i) the amount of an immediate and heavy financial need, including any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution; or (ii) 75 percent of the balance of your Individual Account.

d. Any other plans maintained by your Employer that limit, to the extent otherwise permitted, your elective contributions for the next taxable year to the applicable limit under Section 402(g) for that year minus your elective contributions for the year of the hardship distribution.

e. During the past 12 months, you have not obtained another Hardship Withdrawal from the Plan.

The following rules pertain to the distribution of funds under the Hardship Withdrawal provision:

  • You must seek counseling from an independent service selected by the Trustees before your application for a Hardship Withdrawal will be processed by the Fund Office. The counseling service will verify directly to the Fund Office that you have been counseled.
  • You may withdraw up to 75% of the balance of your Accumulated Share. This amount may include taxes and penalties associated with the withdrawal.
  • Hardship withdrawals are limited to one time in a twelve (12) month period.
  • The minimum amount of the hardship withdrawal is $2,000.00.
  • The request for the hardship withdrawal must be made on the appropriate application form. This form may be obtained from the Fund Office or via the Fund’s website at www.ewtf.org.
  • Hardship withdrawals are payable in the form of a lump sum, and will be paid as soon as administratively practicable after approval.
  • If you are married, your spouse must consent to the hardship withdrawal.
  • A hardship withdrawal is not an eligible Rollover Distribution.

Hardship Withdrawals are Taxable!

Money received as a Hardship Withdrawal will be treated as taxable income for federal tax purposes. The Plan is required by federal law to withhold 10% of the amount of the hardship withdrawal for federal tax purposes. However, you can choose not to have the Plan withhold this 10% by filling out the Waiver attached to the Application and returning it to the Plan. If you do so, you will be responsible for paying the full amount of federal tax owed. If you choose not to complete the Waiver, the Plan will withhold10% for tax purposes. Also, if you are under age 59½, you will owe an additional 10% in federal income tax. The Plan will not deduct this amount; it will be your responsibility to pay. However, if the reason you are taking the withdrawal is to pay medical expenses, you will not owe this extra 10% if the amount of these expenses is more than 7.5% of your gross income.