401(k) Pension Plan: Hardship Distribution Rule Change

The Bipartisan Budget Act (BBA) of 2018 introduced changes to the provisions for hardship distributions. The changes address restrictions for participants who need to access their 401(k) plan assets because of an immediate financial need.

Effective January 1, 2019, NRECA is making a change—as allowed by the BBA—to end the current contribution suspension term of six months for individuals who take a hardship distribution from their 401(k) Pension Plan account. This change affects those cooperatives that have adopted the provision allowing for hardship withdrawals.

Since this rule remains in effect through December 31, 2018, hardship withdrawal requests signed by December 21—and received in good order by December 27, 2018—will be processed this year and the six-month contribution suspension will apply. Requests received and signed after that deadline will be processed in 2019 and participants may continue making contributions to their 401(k) account.

Beginning December 27, 2018, the BA Guide content will be updated to reflect the rule change. Updated PDFs of the “What You Need to Know About Hardship Withdrawals” brochure, “401(k) Pension Plan Financial Hardship Withdrawal Application Instructions and Application” and “Special Tax Notice” will be posted on the Employee Benefits website.

From December 27, 2018 through January 1, 2019, NRECA’s Employee Benefits website will display a brief alert message explaining the rule change on the “Withdrawals” web page for participants.

If you have questions about these changes, please contact your field representative or NRECA’s Member Contact Center at 866.673.2299, or via email at contactcenter@nreca.coop. Representatives are available from 7 am to 7 pm, Central time. Co-op employees with questions about how hardship withdrawals may affect their retirement planning strategy should contact NRECA’s Personal Investment & Retirement Consulting team at 866.673.2299, option 6 or via email at pirc@nreca.coop.