Section 409A contains a very strict set of times when a NQDC plan can make distributions. They are:
(i) separation from service as determined by the Secretary (except as provided in subparagraph (B)(i)),
(ii) the date the participant becomes disabled (within the meaning of subparagraph (C)),
(iv) a specified time (or pursuant to a fixed schedule) specified under the plan at the date of the deferral of such compensation,
(v) to the extent provided by the Secretary, a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, or (vi) the occurrence of an unforeseeable emergency. Death (iii) and a specified time (iv) are not legally debatable; they simply are. Read More
The IRS has announced relief for victims of recent disasters. If you live in a federally-declared disaster area, you qualify for this program. As an affected taxpayer, you may take a loan or hardship distribution from your retirement plan.
Streamlined procedures have been put in place to allow taxpayers quick access to funds in these accounts. The plan must allow for hardship withdrawals. However, these distributions may be made prior to the plan being amended to allow such withdrawals. Contact the human resources department at your company to see if your plan allows these loans or distributions. The IRS is waiving the six-month ban on distributions that normally affects taxpayers taking hardship distributions. Any distribution or loan under this announcement must be made by January 31, 2018.