IRS Issues Final Regulations for Hardship Distributions

We previously reported on the Bipartisan Budget Act (the “Budget Act”) hardship distribution rule changes for qualified retirement plans. On September 23, 2019, the IRS issued final regulations implementing certain statutory changes to the hardship distributions rules, including those required by the Budget Act. The final regulations closely track the proposed regulations issued in November 2018. The following are some of the more significant changes implemented by the final regulations:

  • Employers must remove the six-month suspension of a participant’s plan contributions following a hardship distribution occurring on or after January 1, 2020.
  • Participants may receive a hardship distribution without first requesting a loan from the plan. 
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Retirement Plan Dreams May Go Up in Smoke for Marijuana Companies

Companies in the medical and recreational marijuana industry continue to face an uphill battle for access to financial services.   Although a number of states have legalized the medicinal and/or recreational use of marijuana, marijuana remains classified as a Schedule I drug subject to the federal Controlled Substances Act.  As such, financial services companies that wish to serve the marijuana industry could find themselves subject to the Bank Secrecy Act and the criminal money laundering provisions.  Those challenges are well documented.  However, do the same types of challenges exist if a marijuana company wants to sponsor a qualified retirement plan for its employees?  Read More ›

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Review of Qualified Plan Compensation Definition May be Needed Due To Tax Reform

Tax reform made few changes that directly impact qualified retirement plans; however, it made some changes that may indirectly impact qualified retirement plans.  We previously blogged on the indirect changes that tax reform had on hardship distributions. 

Tax reform also made changes to the taxation of certain fringe benefits that may impact the definition of “compensation” used in some qualified plans. Some qualified plans define compensation for plan purposes based on the taxability of a fringe benefit.  For example, a qualified plan may exclude from its definition of compensation “moving expenses, to the extent excluded from gross income.”  After tax reform, employers may no longer pay or reimburse moving expenses on a tax-free basis.  Read More ›

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Making a List, Checking it Twice

It’s that time of year when boys and girls start making their lists for the holidays, but we in the employee benefits world make a very different kind of list.  In the rapidly changing world of employee benefits and executive compensation law, a checklist can be particularly helpful to make sure important issues do not fall through the cracks.  Each year we publish an executive compensation checklist, a health and welfare plan checklist, and a qualified retirement plan checklist to help individuals stay apprised of changes in the law, changes that they might need to make to their employee benefits plans, and various notice requirements.  Read More ›

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