Hardships with Multiple plans

[Guest Powers]

I have a client tha has two 401(k) Plans - One that we administer and another that we do not. A participant has taken a hardship withdrawal from the plan we administer and I was curious if the suspension extends to both plans or just our plan. I am thinking that it would not, but I am not sure and have not been able to readily find a site. If you know the answer or can provide a site, please advise. Thanx!

[masteff]

It's in reg sec 1.401(k)-1 The exact number escapes me because they moved it around awhile back so the numbering in my older CCH Pension Guide is off.

From the reg (emphasis added):

(2) The employee is prohibited, under the terms of the plan or an otherwise legally enforceable agreement, from making elective contributions and employee contributions to the plan and all other plans maintained by the employer for at least 6 months after receipt of the hardship distribution.

[Guest Powers]

Thanx, masteff, just as I found the following in Sal's book, I read your post:

" The plan...prohibits the employee form deferring or making contributions for at least 6 months after hardship distributions, to all plans maintained by the employer."

It goes on to say, "For purposes of the suspension rule, the phrase "all plans maintained by the employer" means all plans of deferred compensation, whether qualified or nonqualified, including a cash or deferred arrangement (e.g., contributions to a 401(k) arrangement) that is run through a cafeteria plan under IRC 125."

Thanx Again!

[John Feldt ERPA CPC QPA]

So a participant who is having amounts withheld for the 125 plan should have those stopped for 6 months too? (question assumes safe harbor hardship)

[masteff]

So a participant who is having amounts withheld for the 125 plan should have those stopped for 6 months too? (question assumes safe harbor hardship)

If you mean a CODA/401(k) that's w/in a 125 plan, yes. Other features in a 125 plan would be unaffected.