CARES Act and Hardship Withdrawal

[Susan S.]

If a 401(k) plan has a limit of 1 hardship withdrawal per plan year, does the CARES Act override this provision so that a participant can take an additional withdrawal?

[duckthing]

The CARES Act does not override plan-imposed limits like that one. However, the coronavirus-related distributions (CRDs) authorized by the act are not hardship withdrawals so there's no reason a participant who has already taken a hardship in the current plan year would not also have access to a CRD if the plan sponsor wants to allow that.

[RPAS]

The CARES Act states:  "TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an individual would (without regard to subparagraph (A)) be a coronavirus-related distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a coronavirus-related distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000." Therefore the hardship withdrawal is not an issue for your employee.