Despite the fact that there were few changes for retirement plans in the tax bill, the budget bill enacted on February 9, 2018 does contain a few more changes to retirement plans.
- Hardship Distributions
For plan years effective after December 31, 2018, retirement plans can elect to adopt the following optional hardship distribution provisions:
- Elimination of the requirement that a participant take all available loans under the plan before receiving a hardship distribution.
- Removal of the employee contribution suspension for the 6 months following a hardship distribution.
- Additional money sources allowed for hardship distributions: qualified nonelective contributions (QNEC), qualified matching contributions (QMAC), and profit sharing contributions.
- Allowance of investment earnings to be distributed also. Allowed for QNEC, QMAC, profit sharing and employee contribution money sources.
- Distributions Allowed for Wild Fire Damage Relief
Similar to the relief for hurricane areas mentioned previously, under the budget bill a plan may allow distributions to a participant whose principal residence was in a declared California wildfire disaster area as long as the distribution is issued before January 1, 2019 and the participant suffered economic loss due to the disaster. Other requirements apply to these distributions.
NOTE: Allowing any of the above changes to a plan's distribution provisions are optional and plan documents would need to be amended to adopt these changes.