Deferral cap after hardship?

[B21]

I am processing a 401k hardship distribution for a participant who normally contributes the elective deferral max each year. There was a regulation that stated an employee's annual cap on elective deferrals for the year following a hardship distribution is reduced by the amount of elective deferral contributed in the year the employee received the hardship distribution. I do not see this requirement in the current regs. Was it repealed?

[Lou S.]

Yes. That restriction no longer applies and the 12 month hold out was reduced to 6 month. Forget which law changed that but it was some time ago. I believe with the passage of the final 401(k) regs.

[BG5150]

Yes. That restriction no longer applies and the 12 month hold out was reduced to 6 month. Forget which law changed that but it was some time ago. I believe with the passage of the final 401(k) regs.

You can still have a 12-month suspension. It's just that Safe Harbor Match plans MUST have the 6-month period (at most).

I think.

[Lou S.]

Yes. That restriction no longer applies and the 12 month hold out was reduced to 6 month. Forget which law changed that but it was some time ago. I believe with the passage of the final 401(k) regs.

You can still have a 12-month suspension. It's just that Safe Harbor Match plans MUST have the 6-month period (at most).

I think.

Yeah and I think you can even have no suspension depending on what hardship rules you use. Our plans currently all use the "safe harbor" rule on hardships (not to be confused with safe-harbor 401k plan or safe-harbor allocation formula...) so sometimes I forget to mention some important details. Thanks for adding that!