The Internal Revenue Service (“IRS”) has recently relaxed 401(k) rules in order to provide relief to those adversely affected by Hurricane Sandy.  Participants in 401(k) and 403(b) plans, regardless of where of where they are live or work, may take a hardship distribution and use it to assist themselves, dependents, parents or grandparents who lived or worked in the disaster area.  Click the following link for a list of those counties (http://www.irs.gov/uac/Newsroom/Help-for-Victims-of-Hurricane-Sandy).  Further, the IRS will waive the requirement that participant contributions be suspended for six-months following a hardship distribution.  Plans are also allowed to relax any documentation requirements that they normally have in place for hardship distributions.

Under this relief plans are also able to make participant loans before the plan is formally amended to allow them.  This also applies to hardship distributions.  If the plan does not currently allow such distributions they can permit them for the above reasons and do a formal amendment later.  To qualify for this relief withdrawals must be made by February 1, 2013.  For more detailed information please see IRS Announcement 2012-44 (http://www.irs.gov/pub/irs-drop/a-12-44.pdf).