--- title: Are We Still Required to Suspend Deferrals Following a Hardship Distribution? description: With the new hardship distribution regulations going into effect January 1, do we still have to continue suspending deferral elections for six months? image: https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_401_png_category.png --- [![logo](https://www.dwc401k.com/hubfs/_global/logo.svg "logo")](https://www.dwc401k.com/) [![logo](https://www.dwc401k.com/hubfs/Dwc-2019/SVG/logo.svg "logo")](https://www.dwc401k.com/) [![Contribution Limits](https://no-cache.hubspot.com/cta/default/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4) [![Log in](https://no-cache.hubspot.com/cta/default/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc) [![services-icon1](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon1.png) ## Plan Document A properly drafted document is the foundation of achieving the company's objectives and keeping the plan in operational compliance. ](https://www.dwc401k.com/services/plan-document) [![services-icon2](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon2.png) ## Plan Compliance We have a fundamental understanding of how critical plan compliance is to both the IRS and Department of Labor. ](https://www.dwc401k.com/services/plan-compliance) [![services-icon3](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon3.svg) ## Defined Benefits Services We work with business owners and investment advisors to determine what makes the most sense by providing a detailed cost benefit analysis. ](https://www.dwc401k.com/services/defined-benefits-services) [![services-icon4](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon4.svg) ## Mergers, Aquisitions & Related Company Analysis The DWC team is well-versed enough in the nuances and is ready to help you navigate the situation. ](https://www.dwc401k.com/services/mergers-acquisitions-analysis) [![services-icon5](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon5.png) ## Plan Corrections DWC's extensive experience with both the IRS and Department of Labor voluntary correction programs allows us to help you address just about any accident that might happen. ](https://www.dwc401k.com/plan-corrections) [![services-icon6](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon6.png) ## Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. ](https://www.dwc401k.com/services/government-audits) ![service-right-icon](https://www.dwc401k.com/hubfs/QOTW/March%202020/service-right-icon.svg) ## Investment Advisor Support DWC has a long history of successfully partnering with investment advisors. 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[ DWC ](https://www.dwc401k.com/blog/author/dwc) | Published: 12/11/2018 | [Question of the Week (QOTW)](https://www.dwc401k.com/blog/topic/question-of-the-week-qotw), [DWC](https://www.dwc401k.com/blog/topic/dwc), [Hardship Distributions](https://www.dwc401k.com/blog/topic/hardship-distributions), [Salary Deferral](https://www.dwc401k.com/blog/topic/salary-deferral), [Plan Distributions](https://www.dwc401k.com/blog/topic/plan-distributions), [401(k) Q&A](https://www.dwc401k.com/blog/topic/401k-qa) ## **Facts** I sponsor a 401(k) Plan for myself and my staff. I recently processed a hardship distribution for the purchase of my primary residence in October 2018.  I know the rules require me to suspend my deferral elections for six months following a hardship distribution, but I recently came across an article that said I don’t have to impose the suspension anymore.  I’d really like the opportunity to continue deferring if I am allowed. ## **Question** Do I have to continue suspending my deferral election for the remainder of the six-month period following my recent hardship distribution? If am able to stop the suspension, is there anything I need to do with the plan document? ## **Answer** You are correct…on both counts!  The current rules do require you to suspend deferrals for six months for any participant that takes a hardship distribution.  However, there are new rules that take effect January 1, 2019, that do away with that suspension requirement. Since you have already taken the hardship distribution, you have a choice to either let the full suspension play out or stop the suspension as of January 1, 2019.  Keep in mind that how you handle the situation for yourself sets the bar for how all other similarly situated participants must be treated. Currently, there is nothing you need to do with respect to your plan document.  However, you eventually need to adopt an amendment to memorialize application of the new rules to your plan.  That includes documenting how you have implemented the various provisions, e.g. continuing the full six-month suspension or resuming deferrals as of January 1st.  As such, we strongly suggest keeping track of how you handle hardship suspensions in the interim. While the new rules allow plan sponsors to continue to apply the hardship suspensions through the end of 2019, plans are prohibited from applying the suspension for all plan years beginning in 2020 and beyond. If you have questions surrounding hardship distributions, [reach out to DWC](https://www.dwc401k.com/contact) and we are happy to provide our support. For more information on hardship distributions in general and the new rules more specifically, please visit our Knowledge Center [here](https://www.dwc401k.com/knowledge-center/hardship-distributions) and [here](https://www.dwc401k.com/blog/breaking-news-hardship-distributions-even-less-of-a-hardship-than-expected). 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