Publication

Each year, the Internal Revenue Service (IRS) releases an annual Required Amendments List. The list requires plan sponsors with certain individually designed retirement plans to make specific amendments to their plan documents for the plan to maintain its qualified status.

The 2019 List requires changes to plan provisions regarding hardship distributions from retirement plans. (See IRS Notice 2019-64.) All individually designed defined contribution plans (including § 403(b) plans) that permit participants to take hardship distributions must implement two changes with respect to such distributions:

1. Remove the requirement that a participant must suspend his or her elective deferrals or employee contributions for six (6) months as a condition for obtaining a hardship distribution for all hardship distributions made on or after January 1, 2020. Note that a participant can still voluntarily choose to temporarily suspend his or her elective deferrals or employee contributions for a period of time.
2. Require a representation from an employee requesting a hardship distribution that he or she has “insufficient cash or other liquid assets reasonably available to satisfy the need” for hardship distributions made on or after January 1, 2020.

Plan sponsors should confirm that their administrative practices conform to the requirements. In addition, Plan sponsors with individually designed plans must adopt an amendment to reflect the required changes to hardship distributions no later than December 31, 2021.