Our colleagues Christine Richardson, Colleen Lamarre and Danielle Bradley recently posted their Alert titled Recent and Upcoming Changes to 401(k) Plans. In the Alert they discuss the Tax Cuts and Jobs Act (the Act) and the Bipartisan Budget Act of 2018 (the Budget), and the number of modifications they make to the 401(k) plan rules. The modifications are expected to make the administration of 401(k) plans simpler by removing operational burdens, while also giving plan sponsors the ability to offer more options to employees.
Key takeaways include:
- The Tax Cuts and Jobs Act extends the period a participant may make a tax-free loan rollover to an IRA or other retirement plan from a 401(k) account.
- The Bipartisan Budget Act of 2018 provides administrative ease and flexibility by eliminating the six-month contribution suspension period after a 401(k) plan hardship withdrawal and by broadening permissible contribution sources available for hardship withdrawals.
- The Bipartisan Budget Act of 2018 permits plan sponsors to extend California wildfire disaster-related relief to participants through a plan amendment.