Some people argue against any kind of hardship withdrawal or loan from a retirement plan, but few would argue about the special circumstances surrounding the consequences of Hurricane Sandy. Accordingly, the IRS announced on Nov. 16 that participants in a qualified plan may make hardship withdrawals or loans even if the plan does not currently allow for them, on three conditions: they are made between Oct. 26, 2012, and Feb. 1, 2013; the plan or participant is located in an area affected by Sandy; and the plan documents are amended on a timely basis. Read more here.
While retirement plans are not meant to fund all types of activities, with winter approaching and some people unable to get timely insurance payments (assuming they are even covered) or for those whose place of employment was closed even temporarily, it seems only logical to allow for these types of emergency distributions. Some would argue for an emergency fund outside the plan, which speaks to the value of a holistic financial plan created and administered by an experienced advisor.
