Hardship Distributions

Do You Have a Hardship?

Ever since Congress changed the rules to allow plan hardship withdrawals, hardship distributions have been continually increasing among plan participants. There are six safe harbor expenses which the IRS deems to be an immediate and heavy financial need: Purchase of … read more

Hardship Distribution Documentation

IRS requirements are surprisingly vague regarding hardship distributions. In the absence of clear-cut rules, we sometimes see hardship distributions with very little or no supporting documentation. As a plan administrator you should not only comply with the IRS requirements, but … read more

Are you considering allowing 401(k) plan participants to take hardship distributions?

I have had a few clients that have recently elected to offer hardship distributions to their employees in the past few years.  Anytime I see this new election, I like to sit down and go over expectations with the plan … read more

Hardship Distributions – IRS Guidelines

According to the IRS website, a retirement plan may, but is not required to, provide for hardship distributions. If a 401(k) plan provides for hardship distributions, it must provide the specific criteria used to make the determination of hardship. For … read more

Footnote Disclosures

Another year end has passed and now you are probably compiling and sending the 401(k) files to your third party administrator for them to complete their compliance testing, and other plan financial reports.  Many of these documents will then be … read more

Distribution Information to Pass Along to your Employees – Tax Penalties for Early Distribution of Retirement Funds

In these tough economic times, many people are looking at ways to make ends meet. One option your employee may be looking into is a distribution out of their 401(k) plan. As an employer, you should be well versed in … read more

Failure to Comply with Hardship Distribution Requirements

Plan Sponsors often fall short in one simple area of plan administration: record keeping. It is important that Plan Sponsors keep proper documentation for each area of the Plan.  One important area for this documentation is administering hardship distributions to … read more

Hardship Distributions Requirements

If your plan allows for hardship distributions, as a Plan sponsor you are required to verify that proper evidence has been obtained which verifies the participant has immediate and necessary need for the distribution. The Internal Revenue Service (“IRS”) has … read more

Hardship Distributions

Some plans allow for hardship distributions for certain financial hardships. In these current economic times there has been an increase in the number of hardship distributions taken from qualified retirement plans. The IRS regs provided detailed guidelines to make sure … read more

Required Federal Income Tax Withholdings from 401k Distributions

The IRS has various rules related to income tax withholding from 401k distributions. The most common rule is the minimum 20% that is required to be withheld from eligible rollover distributions. However other withholding requirements can result in either no … read more


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