Eliminate the six-month ban on 401k contributions after a hardship withdrawal: The IRS will change its regulation to allow employees who take hardship distributions from a retirement plan to continue contributing to the plan. The new regulations will apply to plan years beginning after December 31, 2018.

Include QNEC, QMAC, and profit-sharing contributions on a hardship withdrawal: Rules related to hardship withdrawals from 401k plans are changed to allow employers to extend hardship distributions to disallowed amounts. It would also eliminate the requirement to take out a loan before taking a hardship withdrawal. The regulation applies to plan years beginning after December 31, 2018.

IRS Authority to Release a Lien on Property Held in Retirement Plans: The new law allows a person to return the contribution to an IRA or an employer-sponsored plan an amount withdrawn (and any interest thereon) subject to a lien and then returned to the person by the IRS. Contributions are allowed without regard to limits normally applicable to IRA contributions and rollovers. The regulation is effective for fiscal years beginning after December 31, 2017.

10% Early Withdrawal Penalty Relief for Use of Participant Retirement Funds from the California Wildfire Disaster: In general, the new law provides relief from the 10% early withdrawal penalty for qualified distributions of up to $100,000 made between October 8, 2017 and January 1. effective January 1, 2019. A participant whose primary place of residence was in a California wildfire disaster area and who suffered an economic loss due to the wildfires may make a withdrawal.

Distributions may be included in income on a pro rata basis for a period of three years from the year of the distribution, unless the individual elects not to have pro rata inclusion applied. Instead, amounts returned to the plan within the three-year period would be treated as a rollover and not included in income. The new law also:

• allows individuals to return funds to retirement plans if the funds were distributed in anticipation of purchasing a home in a wildfire disaster area that was canceled due to the wildfires; Y
• Increases the limit and extends the repayment term of retirement plan loans.

Loan Default Payment Relief Upon Participant or Plan Termination

For a participant loan offset that would otherwise be taxed as a distribution, a participant whose employment ends (or their plan ends) with an outstanding loan will have until the due date, including any extensions, to file their income tax return. year to contribute the offset amount to an Individual Retirement Account or other eligible retirement plan to prevent the loan offset from being taxed as a distribution.

Such tax-free reinvestment treatment does not NO apply to any amount of compensation under a loan that was already considered taxable as a distribution under the Code (and reported on Form 1099-R) either because its terms did not comply with the Code or because it remained in default longer beyond plan. default healing period. This opportunity is available for compensation after 2017.