Hardship withdrawal provisions are available in most 401(k) and 403(b) plans. The rules surrounding hardship withdrawals are changing for plan years beginning on or after January 1, 2019 thanks to provisions included in the Bipartisan Budget Act of 2018 that was signed into law on February 9, 2018.
The legislation changes hardship withdrawal provisions as follows:
The relaxation of hardship withdrawal rules is a welcome relief to plan participants and plan sponsors.
Plan documents will have to be amended to incorporate these new provisions on or before January 1, 2019. At Benefit Resources we are working with our document providers to make sure that our clients will have the opportunity to take advantage of these new rules as soon as they are effective.
For participants who are under suspension for a hardship withdrawal taken in 2018, that suspension could be dropped for the first pay period following January 1, 2019 as long as the document is amended by then.
For more information on hardship withdrawals, including the rules as they are currently, please check out our Hardship Withdrawal Guide blog post.
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