The IRS, DOL and PBGC promptly issued Irma relief on many topics. However, there are some items for which no relief was granted.
Participants
- There is no relief from the 10% early withdrawal tax for hardship distributions from 401(k) plans. Thus, if a participant takes a hardship distribution and is under the age of 59 1/2, the participant is generally going to owe both income tax and the 10% early withdrawal tax.
- The maximum plan loan amount was not increased. The maximum loan amount is generally the lesser of $50,000 and 50% of the vested account balance.
- The loan repayment period was not increased. The loan repayment period is generally 5 years. However, there is some relief with respect to extending the grace period on existing loans.
DC Plans
- New safe harbor plans still must be at least three months long. Thus, for the 2017 calendar year, new safe harbor plans still must be implemented by October 1, 2017. 401(k) deferrals needs to start promptly after the plan’s effective date.
- The deadline for a money purchase plan is 8 1/2 months after the end of the plan year. Thus, for 2016 plan years, the contribution deadline for money purchase plan is September 15, 2017.
- For calendar year plans, the deadline for 11g amendments was not delayed from October 15, 2017.
- For qualification purposes, the deadline for safe harbor 401(k) contributions was not delayed. For deduction purposes, there may be an extension.
DB and Cash Balance Plans
- For calendar year plans, the deadline for 11g amendments was not delayed from October 15, 2017.
This post was updated September 19, 2017 to reflect IRS Notice 2017-49 which extended certain defined benefit and cash balance plan deadlines.