Your organization's 401(k) plan should be a bit less complicated to administer in the coming years, thanks to new Treasury Department regulations.
The new rules, the first major revision of 401(k) rules since 1994, implement a decade's worth of legislative changes, many intended to fix problems with anti-discrimination laws. Example: Employers who discover that they've allowed highly paid workers to contribute too much to their 401(k) will now have more flexibility to undo the error. Employer groups applauded the changes.
For employees, the rules slightly expand the list of hardships for which they are allowed to withdraw money from their 401(k) early without penalty. The new list includes funeral expenses and home repairs.
The rules become effective for plan years beginning on or after Jan. 1, 2006, but employers can choose to implement the new rules sooner. For more details and the regulation's text, go to www.treasury.gov/press/releases/ js2171.htm.