401(k)s and Other Employer-Sponsored Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Sandy

To further assist employees affected by Hurricane Sandy, the Internal Revenue Service (IRS) has announced that it is easing procedural and administrative rules to allow 401(k)s and similar employer-sponsored retirement plans to more readily make loans and hardship distributions to employees and their family members who live or work in a designated disaster area. Ordinarily, laws regarding qualified employer plans impose a number of restrictions on providing loans and distributions from those plans. For example, a pension plan hardship distribution is generally included in an employee’s gross income and subject to a 10% early withdrawal tax. As more fully discussed in IRS Announcement 2012-44, (pdf) the agency is relaxing these rules in order to make emergency funds more accessible to storm victims. Continue reading this entry at Littler's Employee Benefits Counsel.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.