News and Commentary

IRS Lifts Restrictions on 401(k) Loans and Hardship Distributions for Victims of Hurricanes Florence and Michael by Sean Deviney, CFP

Qualifying victims of the 2018 hurricane season, which included hurricanes Florence and Michael, will have an easier time accessing the money they have in employer-sponsored retirement savings plans now that the IRS has lifted restrictions and red tape that typically apply to requests for loans and hardship distributions. To qualify for this relief, hardship withdrawals must be made by March 15, 2019.

Administrators of 401(k) plans, 403(b) tax-sheltered annuities and 457(b) deferred-compensation plans will have less paperwork and more leeway to grant hardship distributions or loans to storm victims who live or work in areas the president declared as disaster zones. This relief also extends to individuals who live outside the disaster area but wish to provide financial assistance to a son, daughter, parent, grandparent or other dependents who lived or worked in the disaster area. A complete list of the Florida, Georgia, North Carolina and South Carolina counties that are covered under the disaster declaration is available at

As a part of the streamlined procedures, retirement plans may relax their rules and eliminate the typical requirements that plan participants provide qualifying reasons for hardship withdrawals and/or submit specific documentation in order to have their requests fulfilled.  However, it is advisable that plan sponsors keep records of all requests and be prepared to amend their existing plans if they do not currently offer participants the availability of hardship distributions and loans.

Employees who receive hardship distributions and/or loans from their retirement savings plan, will not be subject to the usual six-month ban on contributions to 401(k) and 403(b) plans. However, recipients of hardship distributions should remember that any amount they receive as hardship distributions that were not previously taxed will be subject to income tax in the year of the distribution. When recipients are younger than 59 ½, they should also be prepared to pay an additional 10 percent early-withdrawal tax on the distributed amount. In contrast, hardship loans that are typically limited to $50,000 or half of a vested balance will not subject to tax as long as the employee pays the money back to the plan over a period of five years or less.

Retirement plan participants, sponsors and administrators should engage the counsel of experienced retirement plan advisors before requesting or issuing hardship distributions or loans. The professionals with Provenance Wealth Advisors work with businesses of all sizes, through start-ups, mergers and acquisitions, to design benefits plans and implement best practices to meet regulatory compliance and serve the needs of plan sponsors and participants.

About the Author: Sean Deviney is a CFP®* professional and a retirement plan advisor and director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Sean Deviney is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.


This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. The information contained in this report has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.


401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 ½, may be subject to a 10% federal tax penalty. Investments mentioned may not be suitable for all investors. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.


* Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.