Remove hardship from plan

[Santo Gold]

I am looking at a plan that allows for hardship w/d, loans, and age 59-1/2 inservice w/d (this is a 401k plan). The owner would like to eliminate at least 2 of these 3 provisions. Is that allowable, or are all 3 considered protected benefits, that may only be allowed to be removed for new participants?

Thank You.

[JanetM]

Loan is not protected benefit. 59 1/2 withdrawls are for anyone who is eligible to take one now. You can amend these prospectively, with new money not being eligible for withdrawal. Pretty sure the hardship is protected.

[Guest BobK]

"A qualified plan may also be amended to eliminate hardship distributions."

Regulation 1.411(d)-4(x)

Hope this helps

Bob

[JanetM]

Section 411(d)4 was repealed.

[JanetM]

Can't find anything specific to support my answer so here is logic. Correct me if I am wrong.

Hardship is inservice w/d just like age 591/2 w/d. Hardship would be treated the same as age w/d. Amount avialable for w/d at time of amendment would be frozen. Not additional contributions would be available for w/d.

Is that right?

[PLAN MAN]

I think BobK is correct. A 401(k) plan may be amended to eliminate or modify hardship distributions without having to protect the accrued benefits. It is okay for the plan to remove the hardship option altogether. Refer to Treasury Reg. section 1.411(d)-4, Q&A 2(b)(2)(x), which is still valid.

Section 411(d)4 was repealed, but it is not the same as the regulation,

[411(d)(4) Repealed. Pub. L. 99–514, title XI, § 1113(b), Oct. 22, 1986, 100 Stat. 2447]

[Belgarath]

I agree that they can be eliminated. 1.411(d)-4 actually refers to 1.411(d)(6) protected benefits. A hardship withdrawal isn't a protected benefit.

[JanetM]

This is why I love the message board. I learn something new.