The Bipartisan Budget Act of 2018 was passed by Congress and signed into law by President Donald Trump on February 9, 2018. This piece of legislation included changes to rules of hardship withdrawals that are set to go into effect for plan years beginning after December 31, 2018.
These new provisions will likely be a welcome change for plan participants, as some of the current restrictions on hardship withdrawals will be removed with the new legislation.
|Current Provisions||New Provisions|
(as of January 1, 2019)
|A participant cannot take a hardship withdrawal from qualified nonelective contributions (QNECs), qualified matching contributions (QMACs) or safe harbor 401(k) contributions.||Hardship withdrawals are permitted to be taken from earnings on deferrals as well as QNEC, QMAC and safe harbor sources.|
|A participant must take any available in-service distributions and loans from any plan of the employer before requesting a hardship distribution.||Removal of the requirement to take a loan prior to taking a hardship withdrawal.|
|A participant is required to be suspended from making elective deferrals to any plan sponsored by the employer for six months after the hardship.||Removal of the 6-month deferral suspension requirement.|
An amendment will be required to update the plan document for these provisions. We will continue to monitor for any updates, and we will send notifications as needed to ensure that any required amendments to Plan Documents are completed within the mandated timeframes.
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