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Posted

For a 401-k plan that allows hardship withdrawals I have 3 questions as I'm confused as to what has changed with the Secures Act, and what may have changed back!!:

1. For a 1st time homebuyer is there a limit of $10,000 or is it based on need (which may be $14,000 for example).

2.  Can funds be used from the safe harbor match (for a safe harbor 401-k)?  Are there certain needs it could or couldn't be used for.  

3.  Can the new qualifying birth and adoption withdrawal come from all sources?  (safe harbor match included)

 

Any help is appreciated!!!

Posted

1 - the first time home buyer of $10,000 refers to the exemption to the 10% penalty on early distribution. However to my knowledge that exemption only applies to IRAs, not qualified retirement plans unless I missed a law change. As to the amount, it is the amount to meet a heavy and immediate financial need and is not limited to $10,000.

2 - The Bipartisan Budget Act of 2018 allowed for the expansion of safe harbors for hardship distributions to allow among other things, post 1989 earnings on 401(k), safe harbor funds, QNEC/QMAC as eligible for hardship. This was an elective provision and required an amendment to the Plan's definition of eligible hardship to include them.

3 - As far as I know unless the Plan document limits it or it is an unusual situation like money purchase or target benefit money.

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