On October 21, 2016, the IRS released Announcement 2016-39 (available here) allowing certain employer-sponsored retirement plans to make loan payments and hardship distributions to employees and certain members of their families who live or work in eligible counties of regions impacted by Hurricane Matthew (refer to www.fema.gov/disasters for a full list of eligible counties). The relief offered in Announcement mirrors that provided to victims of the recent flooding in Louisiana.
Through Announcement 2016-39, the IRS has minimized the burden on the employee of taking such plan loans and hardship withdrawals by softening the administrative and procedural requirements typically associated with these types of withdrawals from a plan account, meaning the affected employee will have quicker access to the needed funds. Plans that do not currently allow loans and hardship distributions to participants to occur will be permitted to allow for such prior to the adoption by the employer of any amendment allowing them. Additionally, the six-month prohibition on contributions to 401(k) and 403(b) plans by a participant taking a hardship distribution will be waived.
The loan or hardship distribution from a plan account to an affected victim or member of their family must occur on or before March 15, 2016 to qualify for the relief authorized in the Announcement. If you or a family member has been affected by Hurricane Matthew or another recent natural disaster and requires financial assistance to get back on their feet, call Butterfield Schechter LLP. One of our highly qualified employee benefits attorneys will be able to advise you of your rights to obtain such relief through an employer-sponsored retirement benefit plan.