Suspension Period under Proposed Hardship Regulations

[Gruegen]

Is a plan using the "facts & circumstances" method of determining immediate and heavy financial need under Treasury Regulation 1.401(k)-1(d)(3)(iii)(A) permitted to impose a 401(k) contributions suspension period under the Proposed Hardship Regulations?

I realize that the preamble to the proposed hardship regulations state "the proposed regulations do not permit a plan to provide for a suspension of elective contributions or employee contributions as a condition of obtaining a hardship distribution." However, I couldn't tell if that applied solely to plans using the deemed safe harbor reason, or to both deemed safe harbor and "facts & circumstances" method. 

[Luke Bailey]

I'm pretty sure based on the text that the prohibition in Section 1.401(k)-1(d)(3)(iii)(C) is intended to apply in all cases, i.e., whether using safe harbor or facts and circumstances, but it could be clearer. You could argue that you can exclude anyone you want, for as long as you want, as long as the plan passes coverage, but again, 1.401(k)-1(d)(3)(iii)(C) sounds to me like a requirement that you stop the 6-month holdout. I mean, the first sentence says you can have other conditions, but then it says that after 12/31/2019 you "may not" apply a suspension.