On Feb. 23, 2017, the IRS issued an internal memo to their Employee Plans examination employees concerning guidelines for safe-harbor distributions from 401(k) plans. The issuance of this memo stemmed from an Industry Issue Resolution Program meeting with invited trade associations discussing their internal procedures for hardship documentation. The American Retirement Association was one of the invited guests.
The memo provides substantiation guidelines for ‘safe-harbor’ hardship distributions only — and therefore does not address the documents and procedures needed for plans that permit non-safe-harbor hardship rules.
The obvious missing item was any reference to 403(b) plans! We have confirmed that the IRS is working on another internal memo which will address the hardship rules for 403(b)s by way of its cross reference to the 401(k) regulations. This new memo should be issued within the next few days.
NTSA will provide information as is it is available.
The memo provides substantiation guidelines for ‘safe-harbor’ hardship distributions only — and therefore does not address the documents and procedures needed for plans that permit non-safe-harbor hardship rules.
The obvious missing item was any reference to 403(b) plans! We have confirmed that the IRS is working on another internal memo which will address the hardship rules for 403(b)s by way of its cross reference to the 401(k) regulations. This new memo should be issued within the next few days.
NTSA will provide information as is it is available.
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