Retirement Plan Changes: Hardship Distribution to be Effective 12/31/2021

11/02/2021 1:15 PM | Anonymous

The Bipartisan Budget of Act of 2018 and the final regulations enacted several changes to hardship withdrawal rules for qualified retirement plans, including:

  • Repeal of the required 6-month suspension of elective deferrals after a hardship distribution.

  • Permitting amounts contributed as qualified nonelective contributions (QNECs) or qualified matching contributions (QMACs) to be available for hardship distributions.
  • Elimination of the need to exhaust plan loans prior to taking a hardship distribution.
  • Allowing a general standard to be used to determine if a hardship distribution is necessary to satisfy the financial needs of a participant.
  • Permitting hardship distributions to repair a primary residence, even if that repair would not otherwise qualify for a casualty loss deduction.

Plan sponsors also may need to adopt other retirement plan amendments by Dec. 31, 2021, if they made plan changes during 2021.

Sioux Empire SHRM is a 501(c)6 non-profit organization. | PO Box 1302 | Sioux Falls, SD 57101 | Chapter #217

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