ASPPA Eastern Regional Conference to Cover New Hardship Distribution Guidance

By Craig Hoffman • March 10, 2017 • 0 Comments

Although hardship distributions have been a popular feature in 401(k) plans for more than 30 years, they remain a continuing source of aggravation for plan administrators. One thorny problem is what documentation that must be received and maintained to justify making a hardship distribution. This topic is the subject of new IRS guidance that will be covered in detail at ASPPA Eastern Regional Conference to be held April 27-28 in Philadelphia PA.


This issue came to the forefront as a result of an article that appeared in the IRS Employee Plans newsletter in the spring of 2015. The article warned, “The plan sponsor must obtain and keep hardship distribution records. Failure to have these records available for examination is a qualification failure that should be corrected using the Employee Plans Compliance Resolution System (EPCRS).” The article went on to remind plan sponsors that plan records should be maintained that substantiate the hardship distribution was made in accordance with the plan’s terms.

The IRS position outlined in the article caused a great deal of consternation for certain plan administrators who had been processing hardship distributions based on the employee’s certification that the conditions had been satisfied. Over the last few months, the IRS Employee Plans Division worked with industry groups to resolve this issue. The result was new guidance allowing summaries of information collected to suffice in most cases if certain requirements are met.

This new guidance will be the subject of a session at the upcoming ASPPA Eastern Regional Conference to be led by Bob Kaplan, VP and National Training Consultant for Voya Financial, on “The Complex World of Hardship Distributions.” Bob will cover the new guidance and whether it makes sense to adopt policies to incorporate the “summary” approach. Other hardship issues to be covered include acceptable standards of proof, whether to follow the “safe harbor” definition of hardship, and the pros and cons of expanding the sources available for hardship distributions beyond 401(k) deferrals.

The 2017 ASPPA Eastern Regional Conference in Philadelphia is better than ever. A mix of general and concurrent sessions will allow attendees to get the latest word on a wide breadth of subjects. Information about the conference is available here; registration information may be found here. Take advantage of the early bird discount by registering today!!

Craig Hoffman is General Counsel for the American Retirement Association.