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Reminder About Key 2021 Year-End Amendments

As the end of the calendar year approaches, plan sponsors are reminded to adopt certain amendments that may be required for their benefit plans to conform to regulations or reflect certain legal and/or plan design changes. Retirement Plans 2019 Required Amendments List In Notice 2019-64, the IRS published the 2019 Required Amendments List (the “List”), which lists the amendments required to be adopted by December 31, 2021. Pursuant to the List, plans offering hardship distributions must be amended in accordance with the final regulations issued under the Bipartisan Budget Act of 2018. In addition, the List provides that collectively bargained cash balance/hybrid defined benefit plans maintained pursuant to collective bargaining agreements ratified on or before November 13, 2015 must be amended to comply with the final cash balance/hybrid plan regulations. The List also includes certain periodic changes that took effect in 2019, such as adjustments to various dollar limits for… Continue Reading

IRS Announces Proposed Regulations Implementing New Hardship Distribution Requirements

The IRS recently published proposed regulations addressing changes enacted by the Tax Cuts and Jobs Act of 2017, the Bipartisan Budget Act of 2018, and other prior changes to the tax code. Specifically, the proposed regulations: Permit, but don?ÇÖt require, hardship distributions from a participant?ÇÖs elective contributions, QNECs, QMACs (including safe harbor matching contributions), and any earnings on those amounts, regardless of when they were contributed or earned Eliminate the requirement that a participant take out all available plan loans before receiving a hardship distribution (although plans may continue to contain such a requirement) Prohibit plans from containing a requirement that a participant may not contribute to the plan for any period of time following a hardship distribution (in other words, eliminate the six-month suspension rule). If a suspension is still being applied as of January 1, 2019 for a prior hardship distribution, a plan may eliminate the suspension as… Continue Reading

Hurricane and Wildfire Relief

The Bipartisan Budget Act of 2018 (the ?Ç£Budget Act?Ç¥) permits qualified wildfire hardship distributions to be made from October 8, 2017 through December 31, 2018 for qualified individuals impacted by the California wildfires. Plans that elected to provide this relief must be amended no later than the last day of the first plan year beginning on or after January 1, 2019 (i.e., by December 31, 2019 for calendar year plans). In Announcements 2017-11 and 2017-13, the IRS issued relief providing for special hurricane hardship distributions from 401(k) plans for individuals who were directly affected by Hurricane Harvey, Hurricane Irma, or Hurricane Maria. For plans that implemented this relief, the deadline to amend plan documents to incorporate this relief is the last day of the first plan year beginning on or after January 1, 2018 (i.e., by December 31, 2018 for calendar year plans). The Disaster Tax Relief and Airport and… Continue Reading

New Federal Budget Impacts Qualified Retirement Plans

The recently enacted Bipartisan Budget Act of 2018 (the ?Ç£Act?Ç¥) modifies certain Internal Revenue Code provisions relating to hardship distributions from qualified retirement plans that (i) eliminate the requirement that a participant?ÇÖs deferrals be suspended for six months following a hardship distribution, (ii) eliminate the requirement that participants take out all available plan loans before receiving a hardship distribution, and (iii) expand the sources available to fund hardship distributions to include QNECs and QMACs. These changes to the hardship distribution rules are effective for plan years beginning on or after January 1, 2019. In addition to the changes for hardship distributions, the Act provides additional relief for victims of the recent California wildfires that permits eligible plan participants to receive a distribution of up to $100,000, which will not be subject to the mandatory 20 percent income tax withholding or the 10 percent early withdrawal penalty. The participant may elect… Continue Reading

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