Partnering with you to help implement key SECURE 2.0 provisions
Supporting your participants with emergency withdrawal provisions
The SECURE 2.0 Act has made it possible for participants to take a withdrawal when they may need it most.
Section 115— Emergency Expense Withdrawals up to $1,000
Allows eligible participants to take one self-certified, penalty-free withdrawal of up to $1,000 per calendar year for unforeseeable or immediate financial needs relating to personal or family emergency expenses. Only one withdrawal per 3-year repayment period is permitted if the first withdrawal has not been repaid.
Section 312— Financial Hardship and Unforeseeable Emergency Self-Certification
A plan administrator may rely on an employee’s self-certification that they have had a safe harbor event that constitutes a deemed hardship for purposes of taking a hardship withdrawal from a 401(k) plan or a 403(b) plan. The administrator can also rely on the employee’s certification that the distribution is not more than the amount required to satisfy the financial need and that the employee has no alternative means reasonably available to satisfy the financial need. A similar rule applies for purposes of unforeseeable emergency distributions from governmental Section 457(b) plans.
Sections 115 and 312 - Comparisons
Plan sponsors should consider where there is a plan benefit to implementing one or both optional provisions.
Section 115
Emergency Expense Withdrawals up to $1,000 |
Section 312
Financial Hardship and Unforeseeable Emergency Self-Certification |
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Benefits | Benefits |
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What to watch out for/downsides | What to watch out for/downsides |
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Section 115
Emergency Expense Withdrawals up to $1,000 |
Section 312
Financial Hardship and Unforeseeable Emergency Self-Certification |
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Benefits | Benefits |
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What to watch out for/downsides | What to watch out for/downsides |
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Frequently Asked Questions
Please use these frequently asked questions to help you better understand these optional provisions and how they can affect you and your participants.
What do I need to do to adopt either provision?
As a plan sponsor, if you wish to adopt either of these provisions, you will need to complete the Intent to Adopt form and return it to Nationwide. Your plan will need a formal amendment for these provisions by the applicable deadline: December 31, 2029, for governmental plans, and December 31, 2026, for ERISA plans. If Nationwide manages your plan documents, we will ensure that they are formally updated by the regulatory deadlines. If your plan is on an individually designed plan document, the regulatory deadlines above apply.
Can employees take another Emergency Expense Withdrawal as soon as the previous withdrawal is paid off?
Only one Emergency Expense Withdrawal is permitted per calendar year. Participants may be able to request a new Emergency Expense Withdrawal as soon as the amount has been repaid, as long as the last Emergency Expense Withdrawal was not taken in the same calendar year.
How do Emergency Expense Withdrawal repayments affect payroll and 402(g) limits?
Participants have two main options to repay an Emergency Expense Withdrawal:
- Payroll Deductions: Participants who are currently contributing will automatically have those contributions count toward the repayment of the withdrawal. Participants who are not currently contributing can restart their contributions. All contributions received through payroll will count toward the annual 402(g) limit on elective deferrals, which is the maximum amount a participant can contribute to their retirement plan each year.
- Check Repayments: Alternately, participants can make repayments by check. These repayments are treated as eligible rollovers and do not count toward the 402(g) limits. This option allows participants to restore their retirement savings without affecting their annual contribution limits.
Participants generally have up to 3 years to repay the Emergency Expense Withdrawal to avoid paying income taxes on the amount withdrawn.
Contact your Retirement Specialist with any questions.