On November 16, 2012, the Internal Revenue Service announced relief for taxpayers adversely affected by Hurricane Sandy who wish to obtain hardship distributions and/or loans without providing the typical supporting documentation in advance. On November 20, 2012, the Department of Labor issued similar guidance for plan sponsors and their service providers.

The guidance provided that participants were excused from providing the typical verification documentation that is otherwise required in the event they elect to receive a loan or a hardship distribution. Plans that don't already provide for hardship distributions and loans may nevertheless provide them on request.

Further, a plan administrator may rely upon a participant's representations regarding the need for a hardship distribution without any supporting documentation or spousal consent (if applicable). Hardships may be made for any reason, not just the typical "safe harbor" reasons (e.g. to prevent eviction from one's home or to pay funeral costs). Finally, a plan is not required to suspend employee deferrals for at least six months following the distribution. Similar relief was granted for plan loans.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.