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Treasury Official Gives Favorable Interpretation of 401(k) Hardship Amendment Deadlines for Volume Submitter and Prototype Plans And suggests there may be more to come At the ASPPA Annual Conference on Tuesday, October 22, 2019, Carol Weiser, Benefits Tax Counsel at the Treasury, discussed recent concerns about the deadline for preapproved plans to amend to conform to the recently published final hardship regulations. In effect, she said that the deadline is the due date of the employer’s income tax return (e.g., Form 1120), plus extensions, if any, for the tax year which includes January 1, 2020. This is true even if the amendment was put into effect in 2019. This gives us more time than many of us had feared, based on a conservative reading of the final regulation. She gave three examples to illustrate Treasury’s view. In each case, assume the employer is a C corporation and the corporation does not extend the return. Assume a plan sponsor with a calendar year fiscal year implemented the mandatory changes of the regulations in 2019. The deadline is the due date of the 2020 return (April 15, 2021). Assume a plan sponsor implemented all of the changes on June 1, 2019 and has a fiscal year and plan year that ends June 30. The deadline is the due date of the employer’s return for the tax year ending June 30, 2020 (October 15, 2020). Assume a plan sponsor delays implementation of the mandatory changes of the regulations to the latest possible date, which is distributions made on or after January 1, 2020. If the plan sponsor has a tax year that begins on February 1, then the change to the plan would be effective for the fiscal year beginning February 1, 2019 and ending January 31, 2020. (May 15, 2020). She added “We are still looking at whether there is anything else we should be doing to consider whether [the third situation] is perhaps too short a time frame given when we were able to issue the final regulations – so something that we are still looking at, so stay tuned for that.” This offers the prospect of a later announcement of a later, or perhaps fixed deadline, unrelated to tax return due dates. While Ms Weiser prefaced her comments that this was not an “official” pronouncement of the Treasury, the context of the statements put to rest the concerns of those in attendance that the deadlines for calendar year taxpayers might be in early 2020. https://www.erisapedia.com/static/HardshipAmendmentDeadline.pdf

This is in NJ, so not a community property state. If a person names a non-spouse beneficiary on a rollover IRA, does the spouse have any legal basis to claim half or all of this account? No spousal consent form was signed. My dad left his traditional IRA (with Vanguard, a rollover from an employer sponsored 401k) to me when he passed away. My mother, who he was married to but estranged from, has hired a lawyer and is challenging this beneficiary designation. The bank has frozen the account and we now have to “work it out” or go to court. There is not very much money in the account (~50k) so it’s definitely not something worth going to court over if at all possible. I’m bewildered by this as everything I’ve read AND a lawyer I spoke to says she has no legal basis for the claim. I don’t know why the bank is freezing the account if this is so clear cut. Does anyone have any insight into possible nuances to the law around this that we could be missing?

You should give them a W-4P or provide electronic equivalent and they can choose whether to have 10% or some other amount withheld. As some of the responses above point out, under Section 3405(a)(1) the plan administrator is required to withhold 10% unless the participant elects no withholding or a different amount.