Leaderboard

how does the plan define compensation?

I believe IRS guidance is strictly facts and circumstances, but i also think they are quite clear there must be a true separation from service. In this case that may have happened at the time of retirement but clearly the employment relationship is no longer severed. If the governmental 457 rules will allow, I would suggest amending the plan for post-NRA in-service distributions, then this becomes moot. I see clients and their employees all the time having someone "retire" so they can get their pension but it's really just a disguised reduction in hours, and IRS is clear that is not a severance. If IRS came out with workable phased retirement rules, this wouldn't be an issue. In your case, I think the client's position and the IRS's position are different. Good luck.

The thrill of dual eligibility.... the agony of brain cramps!

I don't know why having an outstanding loan would disqualify a participant (who otherwise qualifies) from taking a hardship withdrawal. I was under the impression that making sure other sources of funds, including any available distributions and any non-taxable plan loans, were tapped first was actually part of the safe harbor requirements.