Can Self-Certification be Used for Unforeseeable Emergency Distributions?

Q: I understand that self-certification is permitted for hardship distributions in 403(b) and 401(k) plans, but is it permissible for unforeseeable emergency distributions in a 457(b) plan as well?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Indeed, it is! In fact, the same Section of the SECURE 2.0 Act of 2022 (Section 312) that addressed self-certification of hardship distributions expressly states that self-certification of unforeseeable emergencies is permissible, amending Section 457(d) to add a new subsection (4) as follows:

‘‘(4) PARTICIPANT CERTIFICATION—In determining whether a distribution to a participant is made when the participant is faced with an unforeseeable emergency, the administrator of a plan maintained by an eligible employer described in subsection (e)(1)(A) may rely on a written certification by the participant that the distribution is— (A) made when the participant is faced with an unforeseeable emergency of a type which is described in regulations prescribed by the Secretary as an unforeseeable emergency, and (B) not in excess of the amount required to satisfy the emergency need, and that the participant has no alternative means reasonably available to satisfy such emergency need. The Secretary may provide by regulations for exceptions to the rule of the preceding sentence in cases where the plan administrator has actual knowledge to the contrary of the participant’s certification, and for procedures for addressing cases of participant misrepresentation.’’

Thus, a 457(b) plan may allow for participant self-certification of an unforeseeable emergency, though it is not required to do so.

It is important to note that, if a plan provides for distributions on account of an unforeseeable emergency, it must contain specific language defining what constitutes such a distribution. See Reg. Section 1.457-6(c)(2).

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.

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