Bill Would Address Loan Repayments and Savings After a Hardship Withdrawal

U.S. Senators Bill Nelson (D-Florida) and Mike Enzi (R-Wyoming) introduced legislation to address leakage from defined contribution (DC) retirement plans.

The Shrinking Emergency Account Losses (SEAL) Act would give workers who leave their jobs up until they file their federal taxes to repay loans they’ve taken out of their company-sponsored retirement plan, according to news reports.

The SEAL Act further would allow workers to keep making contributions immediately after taking a loan. The lawmakers’ bill would also allow employees to continue to contribute to their defined contribution (DC) plans during the six months following a hardship withdrawal.

The act additionally would limit to three the number of loans a worker can take from a DC plan and outlaw debit cards linked to DC plan assets.