rollover of h/s distributions

[Guest akercher]

Do the new regulations in effect after 12/31/98 that prohibit rollover of 401(k) contributions apply to pre-1988 earnings from that source?

[Dowist]

What regulations are you talking about? There's nothing that prohibits rolling over 401(k) contributions, provided that the plan allows payment in the first place (and the plan can allow payment only on separation from service, 59 1/2 and hardship).

[LCARUSI]

If you're talking about rollover of a hardship withdrawal distribution, you're right it can't be rolled over and that restriction would also apply to earnings.

[MWeddell]

First of all, the deadline was changed to distributions made after 12/31/1999 by Notice 99-5. Many 401(k) providers will convert their systems during 1999 as permitted by that Notice, but the participant may still choose to roll it over even though the 401(k) provider reports it as ineligible for rollover.

To answer your question, if pre-1988 earnings are included in your 401(k) plan's hardship withdrawal payment option (it doesn't have to be because Treas. Reg. 1.401(k)-1(d)(2)(ii) just says "may") and the participant is taking a hardship withdrawal without some other distributable event, then it will not be eligible for rollover after 12/31/99. See Section V(A)(first sentence) of Notice 99-5.

[This message has been edited by MWeddell (edited 07-21-99).]