New Jersey Administrative Code
Title 17 - TREASURY - GENERAL
Chapter 7 - ALTERNATE BENEFIT PROGRAM
Subchapter 12 - NEW JERSEY ADDITIONAL CONTRIBUTIONS TAX-SHELTERED PROGRAM (ACTS)
Section 17:7-12.14 - Hardship distributions

Universal Citation: NJ Admin Code 17:7-12.14

Current through Register Vol. 55, No. 48, December 18, 2023

(a) To the extent permitted by the terms governing the applicable investment option, distribution of elective deferrals may be made to a participant in the event of hardship. A hardship distribution may only be made on account of an immediate and heavy financial need of the participant and where the distribution is necessary to satisfy the immediate and heavy financial need.

(b) The following are the only financial needs considered immediate and heavy:

1. Expenses incurred or necessary for medical care, described in IRC § 213(d), of the participant, the participant's spouse or dependents, or the participant's primary beneficiary (as defined in Q&A-5 of IRS Notice 2007-7);

2. The purchase (excluding mortgage payments) of a principal residence for the participant;

3. Payment of tuition and related educational fees for the next 12 months of post-secondary education for the participant, the participant's spouse, children, or dependents, or the participant's primary beneficiary;

4. Payments necessary to prevent the eviction of the participant from, or a foreclosure on the mortgage of, the participant's principal residence;

5. Payments for funeral or burial expenses for the participant's deceased parent, spouse, child or dependent, or the participant's primary beneficiary; and

6. Expenses to repair damage to the participant's principal residence that would qualify for a casualty loss deduction under IRC § 165 (determined without regard to whether the loss exceeds 10 percent of adjusted gross income).

(c) A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the participant only if

1. The distribution is not in excess of the amount of the immediate and heavy financial need (including amounts necessary to pay any Federal, State, or local income taxes or penalties reasonably anticipated to result from the distribution);

2. The participant has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the employer (except to the extent such actions would be counterproductive to alleviating the financial need); and

3. All plans maintained by the employer provide that the participant's elective deferrals will be suspended for six months after the receipt of the hardship distribution.

(d) The investment options shall provide for the exchange of information among the Plan Administrator, employer, and the pension providers to the extent necessary to implement the investment options, including, in the case of a hardship withdrawal that is automatically deemed to be necessary to satisfy the participant's financial need (pursuant to Treasury Reg. § 1.401 (k)-1(d)(3)(iv)(E)), the pension provider notifying the employer of the withdrawal in order for the employer to implement the resulting six-month suspension of the participant's right to make elective deferrals under the ACTS. In addition, in the case of a hardship withdrawal that is not automatically deemed to be necessary to satisfy the financial need (pursuant to Treasury Reg. § 1.401(k)- 1(d)(3)(iii)(B)), the pension provider shall obtain information from the Plan Administrator or other pension providers to determine the amount of any plan loans and rollover accounts that are available to the participant under the ACTS to satisfy the financial need.

Adopted by 50 N.J.R. 1616(a), effective 7/16/2018

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