K2retire Posted August 2, 2018 Share Posted August 2, 2018 A client has recently asked if they can require participants to enroll in their financial wellness program as a condition of receiving a hardship distribution from their retirement plan. It seems like a great idea to me, but I have no idea if it is allowed. Link to comment Share on other sites More sharing options...
Pension Dork Posted August 2, 2018 Share Posted August 2, 2018 Is the client requiring the participant to complete this program before they will consider an H.D. or does the person just have to enroll? What happens if they enroll but don't complete the program? What if they complete the program but don't follow any of the recommendations? What if the participant is the client's CFO? See where this is going? I would advise the client that they may think it's a good idea, but it will cause administrative difficulty, be hard to set-up and to enforce, and be considered insulting by many employees. Link to comment Share on other sites More sharing options...
K2retire Posted August 2, 2018 Author Share Posted August 2, 2018 You raise good questions. As I understand it, they intend to merely require them to enroll and hope for the best. Link to comment Share on other sites More sharing options...
Lou S. Posted August 2, 2018 Share Posted August 2, 2018 Is there a cost for enrollment? Link to comment Share on other sites More sharing options...
K2retire Posted August 2, 2018 Author Share Posted August 2, 2018 I believe the employer pays for it, but I'll ask. Link to comment Share on other sites More sharing options...
Larry Starr Posted August 3, 2018 Share Posted August 3, 2018 18 hours ago, K2retire said: A client has recently asked if they can require participants to enroll in their financial wellness program as a condition of receiving a hardship distribution from their retirement plan. It seems like a great idea to me, but I have no idea if it is allowed. Are they using safe harbor hardship rules (I bet they are). Let's assume that is the case. The employee has a RIGHT to the hardship distribution under the terms of the plan. Adding another provision is a violation of their ERISA rights. So the answer is NO, they cannot require it. Now, for a non-safe harbor, I think the answer is still the same, but I'm not sure that they couldn't write the provision into the plan's hardship provision (non-safe harbor). But I would surely NOT do so and I don't think it is a good idea. What does financial wellness have to do with buying a house? Or unreimbursed medical expenses? etc? Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com Link to comment Share on other sites More sharing options...
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