Heads up: The feds are cracking down on 401(k) hardship withdrawals

By Jared Bilski

Here’s another reason why employers should limit (or even eliminate altogether) workers’ opportunities for 401(k) hardship withdrawals.  

Both the DOL and the IRS appear to be ramping up their enforcement of noncompliant hardship withdrawals.

That’s because the feds are worried about leakage in retirement plans – i.e., withdrawals made before retirement that permanently depletes savings. Hardship withdrawals are a big part of the leakage problem.

Because of their concern, the feds’ are checking to make sure that employers are following the very specific criteria for these withdrawals.

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