On September 19, 2019, the IRS issued final regulations updating
the rules for hardship withdrawals from 401(k) plans. These
regulations primarily reflect changes made by the Tax Cuts and Jobs
Act and the Bipartisan Budget Act of 2018 and are very similar to
the regulations that the IRS proposed late last year.
Final Regulations. The final regulations
provide, in pertinent part, as follows:
- Elimination of 6-Month
Suspension. Beginning January 1, 2020, plans may no longer
impose a 6-month suspension on participants who take hardship
withdrawals.
- In
lieu of the 6-month suspension, effective as of January 1, 2020,
plans must require participants to sign (or electronically execute)
a statement certifying that they have no other cash or liquid
assets reasonably available from which they can satisfy the
hardship. The plan administrator may rely on this certification
unless it knows it to be inaccurate.
