PLANSPONSOR - February/March 2019 - 10

Rules & Regulations
Rule Could Increase Plan Leakage
I
RS rules regarding hardship withdrawals
from 401(k) or 403(b) plans cover
two areas, says Amy Ouellette, director
of retirement services at Betterment for
Business. The first is reasons a retirement
plan participant may apply for a hardship
withdrawal, and the second is the onus to
describe why this is an immediate and serious
financial need. Disaster-related casualty
losses has been added to the list of reasons
a participant may apply for a hardship
withdrawal. In total, says Ouellette, that list
now includes the following: to pay medical
expenses not reimbursed; to purchase a
primary residence; to avoid eviction or foreclosure;
to repair damages to one's primary
residence; to finance school tuition fees
and room and board for a family member
or beneficiary; to pay funeral expenses; and
to cover disaster-related casualty losses.
Rules the IRS proposed last
November, reflecting statutory changes
such as some in the Bipartisan Budget
Act of 2018, add " primary beneficiary
under the plan " as an individual for
whom qualifying medical, educational
and funeral expenses may be incurred.
Previously, participants could withdraw
only contributions to their 401(k)-not
earnings or matches. Now they may withdraw
from those additional sources if the
sponsor chooses, Ouellette says. There
are certain differences in the rules about
what sources of money may be withdrawn
from 403(b) plans.
Further, there is no limit on how
10 PLANSPONSOR.com February - March 2019
Art by Claudi Kessels
much a person may withdraw, according
to Ouellette. For instance, if he is facing
foreclosure or eviction, he could withdraw
$200,000 or more. Previously, participants
had to exhaust plan loans available
to them before taking out a hardship
withdrawal. But the proposed rule would
change that to allow participants to go
straight to the hardship withdrawal.
" Unlike a loan, you don't pay
the hardship withdrawal back, " says
Tom Foster, national spokesperson for
MassMutual's workplace solutions unit.
" That money is just gone, and there is no
way to make that up unless you increase
your deferrals to your [defined contribution
(DC) plan], but most employees
taking out a hardship withdrawal are
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PLANSPONSOR - February/March 2019

Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2019

Asset Consolidation
2019 Plan Sponsor of the Year Finalists
2019 Best in Class 401(k) Plans
Systematic Income
The Best of Both Worlds
Plan Defense
Picture Yourself
PLANSPONSOR - February/March 2019 - C1
PLANSPONSOR - February/March 2019 - FC1
PLANSPONSOR - February/March 2019 - FC2
PLANSPONSOR - February/March 2019 - C2
PLANSPONSOR - February/March 2019 - 1
PLANSPONSOR - February/March 2019 - 2
PLANSPONSOR - February/March 2019 - 3
PLANSPONSOR - February/March 2019 - 4
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PLANSPONSOR - February/March 2019 - 9
PLANSPONSOR - February/March 2019 - 10
PLANSPONSOR - February/March 2019 - 11
PLANSPONSOR - February/March 2019 - 12
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PLANSPONSOR - February/March 2019 - 20
PLANSPONSOR - February/March 2019 - 21
PLANSPONSOR - February/March 2019 - Asset Consolidation
PLANSPONSOR - February/March 2019 - 23
PLANSPONSOR - February/March 2019 - 24
PLANSPONSOR - February/March 2019 - 25
PLANSPONSOR - February/March 2019 - 2019 Plan Sponsor of the Year Finalists
PLANSPONSOR - February/March 2019 - 27
PLANSPONSOR - February/March 2019 - 28
PLANSPONSOR - February/March 2019 - 29
PLANSPONSOR - February/March 2019 - 30
PLANSPONSOR - February/March 2019 - 31
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PLANSPONSOR - February/March 2019 - 39
PLANSPONSOR - February/March 2019 - 40
PLANSPONSOR - February/March 2019 - 41
PLANSPONSOR - February/March 2019 - 2019 Best in Class 401(k) Plans
PLANSPONSOR - February/March 2019 - 43
PLANSPONSOR - February/March 2019 - 44
PLANSPONSOR - February/March 2019 - 45
PLANSPONSOR - February/March 2019 - 46
PLANSPONSOR - February/March 2019 - 47
PLANSPONSOR - February/March 2019 - 48
PLANSPONSOR - February/March 2019 - 49
PLANSPONSOR - February/March 2019 - 50
PLANSPONSOR - February/March 2019 - 51
PLANSPONSOR - February/March 2019 - 52
PLANSPONSOR - February/March 2019 - 53
PLANSPONSOR - February/March 2019 - Systematic Income
PLANSPONSOR - February/March 2019 - 55
PLANSPONSOR - February/March 2019 - The Best of Both Worlds
PLANSPONSOR - February/March 2019 - 57
PLANSPONSOR - February/March 2019 - Plan Defense
PLANSPONSOR - February/March 2019 - 59
PLANSPONSOR - February/March 2019 - Picture Yourself
PLANSPONSOR - February/March 2019 - 61
PLANSPONSOR - February/March 2019 - 62
PLANSPONSOR - February/March 2019 - 63
PLANSPONSOR - February/March 2019 - 64
PLANSPONSOR - February/March 2019 - C3
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