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October 10, 2019
On September 23, 2019, the IRS published a final rule simplifying the hardship withdrawal process for defined contribution plan participants. Some of these new, mandatory requirements take effect on January 1, 2020.
Now is the time for plan sponsors to review their plan documents to determine what provisions may need to be updated. More specifically, 401(k) plans that permit hardship distributions must be amended by December 31, 2021 to reflect the new rules. 403(b) plan sponsors have until March 30, 2020, though the Treasury and IRS may extend this tight deadline.
Here is an overview of the key provisions to help you with your evaluation:
The likely consequence of these simplified rules is that they may lead to a reduction in the retirement preparedness of Americans overall. However, not all is bad. Those involved with the administration of hardship withdrawals may spend less time processing requests, which means they’ll have more time to focus on other priorities.
If you have any questions about these new rules, please contact a Cerity Partners retirement plan consultant.
Please read important disclosures here.
Paul is a Partner in the firm’s Retirement Plan Services Group. He has more than fifteen years of experience in the retirement plan industry and...
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