Via JD Supra
By Samantha Kopacz and Samuel Parks
Employer-sponsors of certain retirement plans have work to do prior to the end of 2019. Sponsors of Internal Revenue Code (“Code”) section 401(k) and 403(b) plans must analyze their plan documents and associated administrative procedures in order to ensure compliance with newly issued guidance related to hardship distributions.
On November 18, 2018, the Internal Revenue Service and Department of Treasury issued proposed regulations related to hardship distributions from Code section 401(k) and 403(b) plans (“Proposed Regulations”), which primarily respond to hardship distribution directives given by the Bipartisan Budget Act of 2018.
Plan amendments are required to reflect the changes set forth in the Proposed Regulations. Operational compliance with various provisions of the Proposed Regulations is required by January 1, 2020. This will require detailed review of administrative practices and participant communications (and very likely updates thereto) by year end.