Ask the Experts April 7, 2026

Did SECURE 2.0 Change Match Distribution Rules for 403(b) Plans?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

Reported by

Q: Our private tax-exempt ERISA 403(b) plan provides a safe harbor matching contribution in order to avoid ACP testing. I hear that SECURE 2.0 changed the rules for such contributions so that they now can be distributed on account of financial hardship. Is this correct?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

A: Congress intended for Section 602 of the SECURE 2.0 Act of 2022 to harmonize 403(b) rules with the 401(k) standard, and many now treat these provisions as fully aligned. Technically, however, the current drafting of the Internal Revenue Code may still restrict the distribution of certain employer-provided amounts (such as ACP safe harbor matching contributions) from 403(b)(7) custodial accounts.

While SECURE 2.0 utilized a conforming amendment intended to remove restrictive language for annuity contracts, it utilized a different cross-referencing method for custodial accounts in section 403(b)(7) that arguably leaves historical source restrictions in place. Given this technical discrepancy, plan sponsors should consult with legal counsel to confirm whether their specific investment platform and plan document support making matching contributions available for hardship before implementation.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issmarketintelligence.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.

«