Topic Archive: Plan Distributions

Hardships & Hurricanes: What are the Hardship Rules Following a Natural Disaster?

DWC | 12/18/18
QOTW - 12.18.2018 - Hardships and Hurricanes_What are the Hardship Rules Following a Natural Disaster_Plan Distributions

Facts

Our company sponsors a 401(k) plan.  One of our participants lives in the Florida panhandle and lost her home in Hurricane Michael.  She is under age 59 ½ and is not eligible to take in-service withdrawal, and a loan would only impose a greater burden.  I’ve not seen any direct guidance that permits hardships distributions for those affected by Hurricane Michael the way I have for previous federally declared natural disasters.  She really needs the cash to rebuild her home, but I do not want to approve a hardship that isn’t allowed.

Read More

Are We Still Required to Suspend Deferrals Following a Hardship Distribution?

DWC | 12/11/18
QOTW - 12.11.2018 - Are We Still Required to Suspend Deferrals Following a Hardship Distribution - Plan Distributions

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.

Read More

Are RMDs Required for a Retiree Turned Independent Contractor?

DWC | 11/27/18
QOTW - 11.27.2018 - Are RMDs Required for a Retiree Turned Independent Contractor - Plan Distributions

Facts

We have an employee who attained age 70 ½ earlier in 2018 and will retire by the end of 2018. However, she has agreed to enter into a contract to provide services to our firm and will be reclassified as an independent contractor on December 1, 2018.

Read More

Can We Suspend RMDs for a Rehire?

DWC | 11/13/18
QOTW - 11.13.2018 - Can We Suspend RMDs for a Rehire - Plan Distributions

Facts

We have a non-owner participant in our 401(k) plan who is age 74 and retired in 2014.  That means that he has already been taking required minimum distributions for the last few years. We just recently rehired him in October 2018. Now that he is re-employed he has inquired as to whether he can suspend his RMDs this year.

Read More

Can a Participant Get a Jump on RMDs & Start Taking Them a Few Months Early?

DWC | 11/6/18
QOTW - 11.6.2018 - Can a Participant get a Jump on RMDs and Start Taking Them a Few Months Early - Plan Distributions

Facts

One of the non-owner participants in our 401(k) plan will be turning 70 in April of next year (2019).  That means she will reach age 70 ½ in October and will need to start taking required minimum distributions.  The participant knows her first RMD is due no later than April 1, 2020, but she has asked whether she has to wait that long to actually withdraw the money. 

Read More

What Costs can be Covered Under a Hardship Distribution for Purchase of a Primary Residence?

DWC | 10/30/18
QOTW - 10.30.2018 - What Costs can be Covered Under a Hardship Distribution for Purchase of a Primary Residence - Plan Distributions

Facts

One of the participants in our 401(k) plan submitted a request for a hardship distribution for the purchase of a primary residence.  On review of the supporting documentation, we discovered that the purchase has already occurred and that the requested distribution is to cover the cost of renovations prior to moving in.

Read More

Can In-Service Distributions be Taken Prior to Age 59 1/2?

DWC | 10/23/18
QOTW - 10.23.2018 - Can In Service Distribtuions Be Take Prior to Age 59.5 - Plan Distributions

Facts

One of the participants in our 401(k) plan heard from a friend that it is possible to take money out of a plan while still employed.  I’ve always heard that age 59 ½ is the rule of thumb as to when in-service distributions are allowed, but this participant is only in her mid-40s.  She has about $100,000 in the plan: $65,000 in employee deferrals, $25,000 in safe harbor matching contributions, and $10,000 in profit sharing.

Read More

Can a Charitable Organization be Named as a Plan Beneficiary?

DWC | 09/25/18
QOTW - 9.25.2018 - Can a Charitable Organization be Named as a Plan Beneficiary

Facts

Our company sponsors both a 401(k) plan and a cash balance plan.  One of our employees is a strong supporter of a local charity.  She does not have a spouse or children, so she would like to name the charity she supports as her beneficiary for both of our retirement plans.

Read More

Can a Company Freeze a 401(K) Account if an Employee Is Suspected of Stealing From the Company?

DWC | 05/22/18
QOTW - 5.22.2018 - Can a Company Freeze a 401k Account if an Employee is Suspected of Stealing - Plan Distributions

Facts

We just discovered that one of our employees has been stealing money from the company for quite some time. We fired him as soon as we discovered the theft, and we are working with the police and our attorney to determine what recourse we have. The employee has enough in his 401(k) account with us to cover most of what he stole, but he has submitted a request to take a distribution from the plan.

Read More

401(k) Distribution Rules: After Taking a Hardship Distribution, How Quickly Must a Participant Stop 401(k) Contributions?

DWC | 05/8/18
QOTW - 5.8.2018 - 401k Distribution Rules - After Taking a Hardship Distribution How Quickly Must a Participant Stop 401k Contributions - Plan Distributions

Facts

A participant in our 401(k) plan recently took a hardship distribution. We know we are supposed to suspend his deferrals for six months following the distribution, but we are not entirely clear on how strict that timing is and what happens at the end of the six months.

Read More

Categories
The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.

As Featured In

Wall Street Journal
The Hill
Bloomberg BNA
US News & World Report
Yahoo News
Plan Sponsor
© 2019   DWC - The 401(k) Experts | P.O. Box 241267, St. Paul, MN 55124 Site By Raka