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A 401(k) plan may allow you to receive a hardship distribution because of an immediate and heavy financial need. The Bipartisan Budget Act of 2018 mandated changes to the 401(k) hardship distribution rules. On November 14, 2018, the Internal Revenue Service released proposed regulations to implement these changes.
This notice modifies the two safe harbor explanations in Notice 2018-74, 2018-40 I.R.B. 529, that may be used to satisfy the requirement under § 402(f) of the Internal Revenue Code (Code) that certain information be provided to recipients of eligible rollover distributions. The safe harbor explanations as
The IRS today released an advance version of Notice 2018-74 that modifies two “safe harbor” explanations with respect to eligible qualified plan rollover distributions, to reflect legislative changes as well as to take into consideration other guidance.
The final regulations permit, but do not require, 401(k) plans to allow hardship distributions of elective contributions, QNECS, QMACS, and safe harbor contributions and earnings on these amounts regardless of when contributed or earned. The change can be made as of January 1, 2019. (IRC Section 401(k)(14)(A) and Reg. Section 1.401(k)-1(d)(3)(ii))
13 Ιουλ 2023 · Effective for plan years beginning after December 31, 2018, a 401(k) plan may — but is not required to — permit a hardship withdrawal to include employer contributions that are QNECs and QMACs (including those made under a safe harbor 401(k) plan) and earnings attributable to these contributions.
23 Σεπ 2019 · The final regs modify the safe harbor list of expenses in existing Reg. §1.401(k)-1(d)(3)(iii)(B) and distributions for these safe harbor expenses are deemed to be made for an immediate and heavy financial need.
16 Ιουλ 2021 · The snapshot explains the rules for hardship distributions of elective deferrals, qualified matching contributions (QMACs), qualified nonelective contributions (QNECs) and earnings on those contributions under 401 (k) plans.
