Hurricane update: IRS facilitates withdrawals from 401(k)
The Internal Revenue Service (IRS) announced that participants of 401(k) plans (and other types of company-sponsored retirement plans) affected by Hurricane Harvey, are automatically approved to obtain a hardship withdrawal and/or participant loan from their 401(k) plan. This means that business owners and their employees can access their retirement monies as financial assistance for recovery from this disaster and other basic needs.
Strict administrative and procedural rules often apply to hardship and loan programs in a retirement plan; the IRS’ announcement effectively suspends these restrictions for victims of Hurricane Harvey and allows retirement plan participants to more quickly and easily gain access to their 401(k) or other retirement monies.
Parameters for distribution
401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims (and family members). This broad-based relief means that a retirement plan can allow a victim of Hurricane Harvey to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan/account. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area. Leading Retirement Solutions is helping 401(k) participants and business owners, affected by Harvey, get access to their retirement monies for disaster recovery and basic needs.
In the wake of Hurricane Irma, the IRS has issued a number of benefits, similar to those extended after Hurricane Harvey, to business owners and their employees participating in a 401(k), 403(b), Defined Benefit or other type of company sponsored retirement plan.