SECURE Act 2.0 Section 602

Question 1

The way that  I read Section 602 (and the new paragraph 403(b)(17), 403(b)'s may only permit hardship distributions from elective deferrals, QNEC's and QMAC's.  Nothing else is listed.  No one seems to be saying that 403(b) plans that were previously allowing hardships from Employer Contribution accounts are no longer allowed to do so, so I must be missing something.  But the plain English words in (17) do not list any Employer sources besides QNEC's and QMACs???

Question 2

Sort of related to Question 1 - people seem to be saying that the hardship rules are now aligned for 403bs and 401ks, but 403(b)(7) plans (mutual fund funded plans) seem still exclude employer contributions, while insurance based programs do not (that's from my reading in the ERISA Outline book). I assume this is generally agreed?  I'm surprised it's not mentioned in many of the write-ups I've read because I've always found that particular inconsistency to be by far the most baffling provision in all of retirement plan law.

Question 1 (proposed answer)

Maybe I have it.  I think it is because 403(b)(7) applies to the entire custodial account, and only provides a hardship exception for payroll deduction contributions, whereas 403(b)(11), which applies to distributions from annuity contracts, only adds distributio restrictions to elective deferrals.  There is no statutory language that limits the availability of in-service distributions for non-elective deferrals.  This is consistent with the EOB which indicates that amounts held in annuity contracts, other than elective deferrals and QNECs/QMACs (in other words Match and Nonelective), can be distributed after any "event" such as attainment of any age, years of participation, etc.

I think this reading actually answers Question 2 as well.