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This topic was discussed at the ASPPA National conference earlier this week. The bullet points for the discussion were: For this purpose, a terminally ill individual means an individual who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 84 months or less after the date of the certification. The employee must furnish sufficient proof to the plan administrator that the employee qualifies under this standard. Not subject to the 10% early withdrawal penalty tax Can be repaid within three years Note: This provision does not create a new distribution right under retirement plans, so a participant would need to be eligible for a distribution under an existing rule. It was taken as a given that the employee needs a physician to certify the individual is terminally ill and is expected to die within 84 months. There was a lot of discussion around the employee furnishing proof to the plan administrator. Some comments addressed HIPAA and privacy concerns. Other comments were concerned that an employee would be hesitant to disclose to their HR department that the employee was likely to die within 84 months. The concern primarily focused on the information leaking out and on the impact the information could have on career advancement and salary increases. These would be a significant burden on an employee where the only additional benefit derived from this disclosure is avoidance of the 10% penalty. Note that the text of S2.0 326 says "an employee shall not be considered to be a terminally ill individual unless such employee furnishes sufficient evidence to the plan administrator in such form and manner as the Secretary may require". No one yet knows what the Secretary may require, and there are efforts to have any such requirements acknowledge the privacy concerns. The rules for repayment within 3 years for the terminally ill provision points to the QBAD rules in 72(t)(2)(H)(v). The repayments are at the discretion of the participant and the repayments could be made to an eligible retirement plan or an IRA as a rollover contribution. The provision does not say the repayments have to be made to the retirement plan from which they are taken. The question was asked why would a participant want to repay the distribution? The response was the repayment would be part of a death benefit distributed to the plan's beneficiaries (as opposed to being part of the participant's estate). The treatment of the terminally ill distribution is different from virtually every other one of the newly or recently added forms of distribution that allow for self-certification. Expect more clarification to come from the agencies.

Here’s the rule: The term “blackout period” means, in connection with an individual account plan, any period for which any ability of participants or beneficiaries under the plan, which is otherwise available under the terms of such plan, to direct or diversify assets credited to their accounts, to obtain loans from the plan, or to obtain distributions from the plan is temporarily suspended, limited, or restricted, if such suspension, limitation, or restriction is for any period of more than three consecutive business days. 29 C.F.R. § 2520.101-3(d)(1)(i) https://www.ecfr.gov/current/title-29/part-2520/section-2520.101-3#p-2520.101-3(d)(1)(i). As Luke Bailey points out: Even if there is no disruption to an individual’s power to direct investment (because the plan does not provide such a power until after the recordkeeping change is completed), a blackout might result if there is a practical inability to get a loan or distribution.

thepensionmaven it's going to depend on whether there is a disruption to a participant's ability to take a distribution or loan while the change is going on behind the scenes. In this case, which seems fairly unique, determining whether there is any such disruption may require some exercise of judgement.