IRS Snapshot Guidance Provides Insight into Post-2018 Plan Hardship Distribution Requirements, July 11, 2019

The Bipartisan Budget Act of 2018 made substantial changes to the rules governing hardship distributions from qualified plans beginning in 2019. These changes have left many employers wondering how to adequately comply with the new rules. The IRS has directed its agents to review the language in the plan document, as well as any written statement provided by the participant to ensure all documents are properly executed and signed. Further, agents are directed to examine any records that the employer used to verify that a true hardship did exist, as well as the amount of that hardship. These records can include bills, eviction notices, closing documents for purchase of a home, etc. The employee should also provide documentation to establish that no other readily available source of funds existed, which can be as simple as an employee attestation. For more information on post018 hardship distributions, visit Tax Facts Online.