As we approach the end of 2018, qualified retirement plan sponsors should consider reviewing the various changes brought on by recent legislation, regulations and agency guidance to determine whether any plan amendments or administrative updates are needed. This advisory provides a brief summary of some of the notable changes affecting qualified retirement plans.
As mentioned in our February 2018 client advisory, for plan years commencing after December 31, 2018, the Bipartisan Budget Act of 2018 (“Budget Act”) eases hardship withdrawal requirements by:
- Not requiring a plan loan to be taken before a hardship withdrawal is made.
- Allowing hardship withdrawals to include qualified matching contributions (“QMACs”), qualified non-elective contributions (“QNECs”), and earnings from all eligible sources.
- Deleting the six-month suspension on deferrals following a hardship withdrawal.
Pursuant to recent IRS proposed regulations implementing the above legislative changes, plan sponsors may adopt any or all of the above changes for 2019. Plan amendments implementing the changes, however, need not be adopted until the end of the second calendar year that begins after the issuance of the IRS Required Amendment List that includes such changes. Employers seeking to put these hardship relief changes into effect for 2019 should, however, contact their third party administrators now to ensure appropriate administrative changes are in place for a January 1, 2019 effective date.
To read the full advisory on the Kelley Drye website, click here.