Wagner Law Group is a nationally recognized practice in the areas of
ERISA and employee benefits, estate planning, employment, labor and
human resources and investment management.
in 1996, The Wagner Law Group is dedicated to the highest standards
of integrity, excellence and thought leadership and is considered to
be amongst the nation's premier ERISA and employee benefits law
firms. The firm has seven offices across the country, providing
unparalleled legal advice to its clients, including large, small and
nonprofit corporations as well as individuals and government entities
worldwide. The Wagner Law Group's 32 attorneys, senior benefits
consultant and five paralegals combine many years of experience
in their fields of practice with a variety of backgrounds. Eight
of the attorneys are AV-rated by Martindale-Hubbell
and seven are Fellows of the American
College of Employee Benefits Counsel, an invitation-only
organization of nationally recognized employee benefits
lawyers. Five of the firm's attorneys have been named
to the prestigious Super
Lawyers list for 2017, which highlights outstanding
lawyers based on a rigorous selection process.
Wagner Law Group
Connecticut Avenue, N.W.
Fax: (561) 293-3591
7108 Fairway Drive
Palm Beach Gardens, FL 33418
East Kennedy Boulevard
Tampa, FL 33602
Francisco, CA 94104
25 W. Moody Avenue
St. Louis, MO 63119
February 14, 2018
ERISA & Employee Benefits
Qualified Plan Changes in
Bipartisan Budget Act
On February 9, 2018, Congress passed the
Bipartisan Budget Act of 2018 ("Budget Act"). This two-year
budget agreement contains a number of provisions relating to
tax-qualified retirement plans, including hardship withdrawal
changes, improper levies, and disaster relief provisions.
Hardship Withdrawal Changes
The Budget Act changes hardship withdrawals in
three ways. First, the IRS is directed to eliminate, within one year
of February 9, 2018, the regulations providing for the six-month
suspension of elective contributions upon a participant's receipt of
a hardship withdrawal. The revised regulations are to apply to plan
years beginning after December 31, 2018.
Second, for plan years beginning after December
31, 2018, participants will no longer be required to obtain available
loans under the plan before requesting a hardship withdrawal.
Third, amounts available for distribution due to
hardship have been expanded to include elective deferrals (plus
earnings) to profit sharing or stock bonus plans (this includes
401(k) plans), qualified matching contributions (plus earnings) and
qualified nonelective contributions (plus earnings). Under present
law, only elective deferrals and pre-1989 earnings on elective
deferrals are available for distribution on account of hardship. This
provision is also effective for plan years beginning after December
Please be advised that all of these provisions,
which are intended to facilitate hardship withdrawals, are optional
provisions. Plan sponsors concerned about "leakage"
resulting from hardship withdrawals need not adopt any of these
With respect to amounts paid under an improper
levy, the Budget Act permits an individual to recontribute the
amounts (plus interest), within a specified timeframe, to the
eligible retirement plan after it has been returned by the IRS. The
eligible retirement plan must permit such recontribution, and if it
is amended to so provide, the amounts will be treated as an eligible
rollover contribution. This provision applies to amounts paid under
an improper IRS levy in tax years beginning after December 31, 2017.
It is at the discretion of plan sponsors whether to amend their
qualified plans to provide for this change.
The third area addressed by the Budget Act is
relief for individuals impacted by the California wildfires.
Qualified wildfire distributions. An individual whose principal place of
residence during any portion of the period from October 8, 2017 to
December 31, 2017 is in a Presidentially-declared wildfire disaster
area and who sustained an economic loss due to the wildfires is
eligible to receive a qualified wildfire distribution from his or her
eligible retirement plan. The amount of the distribution may not
exceed $100,000 and is not subject to the 10% early withdrawal tax
under section 72(t) of the Internal Revenue Code of 1986, as amended
(the "Code"). Qualified wildfire distributions are
available from eligible retirement plans on or after October 8, 2017
and before January 1, 2019.
Further, the amount of a qualified wildfire
distribution can be included in income ratably over a three-year
period, unless the individual elects not to have ratable inclusion
apply. Alternatively, the amount can be repaid/recontributed to the
eligible retirement plan within the three years and will be treated
as an eligible rollover contribution and not included in income.
Cancelled home purchases. The Budget Act also permits individuals to
recontribute certain retirement plan withdrawals received after March
31, 2017 and before January 15, 2018 for the purchase of a home or
construction in the California wildfire disaster area that was
cancelled because of the wildfires.
For an individual whose principal place of residence during any
portion of the period from October 8, 2017 to December 31, 2017 is
located on the California wildfire disaster area and who sustained an
economic loss due to the wildfires, the maximum amount that a
participant or beneficiary can borrow from a retirement plan is
increased to the lesser of $100,000 and the full amount of the vested
account balance (from the lesser of $50,000 or one-half of a
participant's vested account), for loans made during the period
February 9, 2018 to December 31, 2018. Loan repayments may also be
delayed for a one-year period. These provisions are effective
immediately, although they will require a plan amendment to be
Additionally, the Budget Act created a joint
select committee composed of 16 members - eight from the House and
eight from the Senate, with an equal number of Democrats and Republicans,
to address solvency issues for multiemployer plans and the Pension
Benefit Guaranty Corporation ("PBGC"). The Joint Committee
is required to provide legislative language by November 30, 2018.
Finally, the IRS is directed to create a Form
1040SR for individuals over age 65. The form will be similar to Form
1040 EZ, but its use shall not be restricted because the individual's
income for the year includes, among other items, distributions from
tax qualified plans.