| Summary of Key Withdrawal Provisions |
| Issue |
Summary |
Implications |
| Loans |
The proposed regulations allow for participant loans that follow “72(p)”(rules that govern 401 loans). |
Confirms a long-held ICMA-RC position that employers may elect to include loan feature in their 457 plans. |
| Withdrawal Elections |
The regulations confirm that all 457 participants may change their payment dates/schedules.This includes participants who, prior to January 1, 2002, were receiving benefit payments or who had established a beginning payment date. |
Provides same flexibility to 457 plan participants as enjoyed by participants in other plans such as 401(k) plans. |
| Emergency Withdrawals |
Specific examples of unforeseeable emergencies are provided:
- imminent foreclosure of, or eviction from primary residence
- non-refundable deductibles and prescription medicine
- funeral expenses for a family member (family member is defined as a spouse or dependent as defined in IRS Code Section 152 (a))
- the need to rebuild a home following damage to a home not otherwise covered by homeowners’ insurance
|
Broadens previously issued guidance and allows more situations to qualify for emergencies. |
| Emergencies may now occur to a participant’s beneficiary on the same terms as would apply to the participant. |
Previously the only covered emergencies for beneficiaries were those associated with the unexpected illness, accident, or disability of a participant’s dependent. |
| Home purchases and the payment of tuition are not considered unforeseeable emergencies except in extraordinary circumstances. |
Consistent with
prior guidelines. |
| Divorce Situations— QDROs (Qualified Domestic Relations Orders) |
457 plans may comply with the terms of QDROs (the rules which apply to 401 plans) without jeopardizing their exempt status. |
Provides for a more logical means of dealing with 457 assets in divorce situations. |
