Once you have separated from service, the plan must allow you to roll the balance in the plan over to an IRA. They must also allow you to do so by direct rollover to avoid tax withholding. It's up to the employer to define what is meant by no-longer employed, but once they consider you no longer employed and permit a rollover to another retirement account, nothing you do after the rollover affects the status of the rollover. They is no justification for them to retroactively make it a hardship distribution that is ineligible for rollover.
