Guest Jan C Posted January 20, 1999 Posted January 20, 1999 I just received this from CCH: the IRS has issued a notice that allows plans to treat hardship distributions from 401(k) plans or 403(B) plans in the year 1999 as eligible rollover distributions. Previously under the IRS Restructing & Reform Act of 1998, hardship distributions were not to be considered eligible rollover distributions. However, according to the notice, a number of plan adminstrators expressed concern that they had inadequate time to change plan systems in order to comply with the December 31, 1998 cut-off date. I'm confused b/c this conflicts with information that I received from ASPA. Could someone please clarify this for me as to what the law is and means? thanks!!
MWeddell Posted January 21, 1999 Posted January 21, 1999 The IRS delayed the effective date of the new law regarding the rollover and withholding rules for hardship withdrawals until 1/1/2000. Plan providers may start to implement the new law at any time from 1/1/1999 to 1/1/2000. However, even if a plan provider reports a hardship withdrawal as not eligible for rollover and doesn't process a direct rollover during 1999, the participant may still make a rollover the old indirect way (within 60 days of the distribution). It's a pretty technical point, because virtually no one ever rolled over hardship withdrawals anyway. Besides changing the rollover rules, the law will also change the withholding rules to 10% withholding, which the participant will have the opportunity to waive, instead of 20% mandatory withholdings on hardship withdrawals not directly rolled over.
Recommended Posts
Archived
This topic is now archived and is closed to further replies.