Specifically, the regulations call for information sharing concerning the participants' employment status, loans, hardship distributions
and other plan distributions.
include distributions used for certain postsecondary education expenses for an employee or his or her spouse or dependents, and burial or funeral expenses for the employee's deceased parent, spouse or dependents.
Retirement Plans Loans to Katrina Victims 401(k)s and similar employer-sponsored retirement plans, such as 403(b) tax-sheltered annuities and certain 457 deferred-compensation plans, can make loans and hardship distributions
to victims of Hurricane Katrina and members of their families.
401(k)-1(d)(2) deals with the rules applicable to hardship distributions
Comply with the distribution restrictions, such as improper hardship distributions
or distributions on plan termination.
improper hardship distributions
and improper withdrawal of salary reduction contributions).
The employee obtained all distributions, other than the hardship distributions
, and nontaxable loans available under all plans maintained by the employer.
Distributions of excess deferrals under IRC section 402(g), amounts treated as distributed due to failure to repay loans and hardship distributions
are not exempt as of this writing, which can impose a significant burden on employees who already are in difficulty.
Coordinating defined contribution plan loans with hardship distributions
can provide participants with greater access to funds in their accounts.
107) An employer can amend a plan to specify or modify nondiscriminatory and objective standards for meeting the hardship distribution
requirements or eliminate hardship distributions
without violating the Sec.
These include required minimum distributions (RMDs), hardship distributions
, corrective distributions of excess deferrals, dividends from employer securities and deemed distributions (Q&A 2).
Perhaps this is because many homeowners can no longer tap into the equity in their homes, but whatever the reason, plans differ on the rules for hardship distributions
and under exactly what qualifies as a 'hardship.