Ask the Experts December 11, 2018

(b)lines Ask the Experts – Requiring Participants to Take Loans Prior to Hardships

“I understand that under the new proposed hardship regulations a participant will no longer be required to take all available loans from the retirement plans that we sponsor.
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“However, if we want to retain the requirement that a participant take such loans prior to being eligible for a hardship distribution, can we?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

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Yes. As the Experts addressed in a prior Ask the Experts column, many plan sponsors do feel that this particular provision (requiring that loans be take prior to a hardship distribution) in their retirement plans minimizes plan leakage, thus preserving retirement plan assets for their intended purpose; namely, retirement.

And, the proposed regulations do indeed specifically address this issue, as follows (boldface text reflects the Experts emphasis):

“Additional conditions. A plan generally may provide for additional conditions, such as those described in 26 CFR 1.401(k)-1(d)(3)(iv)(B) and (C) (revised as of April 1, 2018) or, for distributions made before January 1, 2020, the representation described in paragraph (d)(3)(iii)(B) of this section, to demonstrate that a distribution is necessary to satisfy an immediate and heavy financial need of an employee. For example, a plan may provide that, before a hardship distribution may be made, an employee must obtain all nontaxable loans (determined at the time a loan is made) available under the plan and all other plans maintained by the employer. However, for a distribution that is made on or after January 1, 2020, a plan may not provide for a suspension of an employee’s elective contributions or employee contributions as a condition of obtaining a hardship distribution.”

Thus, if the proposed regulations are adopted as drafted, it is clear that a plan sponsor may continue to require that all available loans from all retirement plans of the plan sponsor be taken prior to a hardship distribution being issued.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@strategic-i.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.
Products December 10, 2018

Cigna Offers Financial Wellness Program to Group Insurance Clients

The program includes tools such as “money coaching,” where customers can utilize a financial professional for thirty days at no additional cost; identity theft protection and resolution services, and tools and resources for preparing wills and other important legal documents, among other things.

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Cigna’s My Secure Advantage (MSA) financial wellness program will be offered to group insurance customers, effective upon the new year.

The program includes tools such as “money coaching,” where customers can utilize a financial professional for thirty days at no additional cost; identity theft protection and resolution services, and tools and resources for preparing wills and other important legal documents. Other services include a 30-minute complimentary legal consultation with a licensed practicing attorney, with added discounts should clients need extra time; discounts on tax planning and preparation services; and more.

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“Most Americans admit to experiencing financial stress during the course of a year, so it’s not surprising that it can take a toll on a person’s health and well-being,” says Bill Smith, president of Cigna Group Insurance. “My Secure Advantage provides the tools, resources and advice to meet the needs of individuals wherever they are in their personal financial journey and life stage, such as buying a home, having a baby, paying for college, getting ready for retirement or experiencing a loss of income due to an illness or injury. The goal is to help individuals take control of key aspects of their finances and help them improve their sense of security.”

While the platform will be standard for most Cigna Group Insurance customers come January 1, including clients with life, accident, disability, accidental injury, critical illness and hospital care insurance policies, according to the release, “the program is not available under policies insured by Cigna Life Insurance company of New York.”

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