What's happening
Provision Section 115 allows eligible participants to take one self-certified, penalty-free withdrawal of up to $1,000 per calendar year for unforeseeable or immediate financial needs relating to personal or family emergency expenses. Only one withdrawal per 3-year repayment period is permitted if the first withdrawal has not been repaid.

Plan Sponsor considerations

Benefits

  • Reduce financial stress on employees faced with unexpected emergency expenses
  • Potential to increase plan enrollment and engagement
  • There are no changes required to the payroll submission process; Nationwide will track the amount of payroll contributions toward the repayment of the distributed amount

What to watch out for/downsides

  • May allow for unnecessary access to retirement plan accounts originally intended to be long-term investment vehicles
  • Increased fraud risk as participants might falsely claim emergencies to withdraw retirement funds
  • Future IRS guidance may change how this provision is administered

Participant Considerations

Benefits

  • Eligible distributions not subject to the 10% early withdrawal penalty
  • Participant may self-certify the qualifying event​
  • Repayment via payroll or check
  • Ease of access to emergency funds

What to watch out for/downsides

  • Only one distribution is allowed per calendar year if repaid​
  • If distribution is not repaid, must wait an additional 3 calendar years before taking another emergency withdrawal​
  • The maximum emergency withdrawal is $1,000, as long as the vested account balance remains above $1,000 after the withdrawal
  • May impact retirement readiness by allowing access to retirement plan accounts originally intended to be long-term investment vehicles​
  • This option is available to participant only via paper form

Frequently asked questions
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As a plan sponsor, if you wish to adopt this provision, you will need to complete the Intent to Adopt form and return it to Nationwide. Your plan will need a formal amendment for these provisions by the applicable deadline: December 31, 2029, for governmental plans, and December 31, 2026, for ERISA plans. If Nationwide manages your plan documents, we will ensure that they are formally updated by the regulatory deadlines. If your plan is on an individually designed plan document, the regulatory deadlines above apply.

Adoption form - Email forms to rpublic@nationwide.com

Only one Emergency Expense Withdrawal is permitted per calendar year. Participants may be able to request a new Emergency Expense Withdrawal as soon as the amount has been repaid, as long as the last Emergency Expense Withdrawal was not taken in the same calendar year.

Participants have two main options to repay an Emergency Expense Withdrawal:​

  1. Payroll Deductions: Participants who are currently contributing will automatically have those contributions count toward the repayment of the withdrawal. Participants who are not currently contributing can restart their contributions. All contributions received through payroll will count toward the annual 402(g) limit on elective deferrals, which is the maximum amount a participant can contribute to their retirement plan each year.​
  2. Check Repayments: Alternately, participants can make repayments by check. These repayments are treated as eligible rollovers and do not count toward the 402(g) limits. This option allows participants to restore their retirement savings without affecting their annual contribution limits.​
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Participants generally have up to 3 years to repay the Emergency Expense Withdrawal to avoid paying income taxes on the amount withdrawn.
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Review and consider whether this optional provision is right for your plan.
Contact your Retirement Specialist with any questions.