The IRS has released a final rule that relaxes several existing limits tied to taking 401(k) hardship withdrawals.
Several provisions will change under the new rule, and include an elimination of the six month post-withdrawal contribution suspension provision, ease hardship verification, and will make earnings available for withdrawal.
According to SHRM, the final rule will do the following:
- “Eliminate the six-month contribution-suspension requirement;
- End the need to take a plan loan before a hardship withdrawal;
- Make earnings available for withdrawal;
- Ease hardship verification.
- Provide disaster relief.”
Plans that “permit hardship deductions will need to be amended to reflect these new rules by December 31, 2021, but operational changes will be needed to comply with the new regulations by January 1, 2020”.
To read more about this new legislation, please click here.
The information included in this blog post originally appeared in an article from SHRM on September 25, 2019 written by Stephen Miller.