SECURE 2.0’s self-certification rules mark a consequential shift in how hardship withdrawals are accessed, with meaningful implications for plan sponsors. By eliminating the need for third-party documentation, self-certification reduces administrative friction and improves access during legitimate financial need—but it also lowers the psychological and procedural barriers to tapping retirement savings. The result has been a noticeable increase in hardship distributions, accelerating plan leakage as participants respond to short-term financial pressures by drawing down long-term retirement assets. Over time, this erosion can materially undermine retirement readiness and widen outcome disparities among participants who are least able to replace withdrawn savings.
These concerns were underscored following a recent TPSU program in Nashville, where Fred Barstein spoke with adjunct lecturer Steve Glasgow of HUB International. Glasgow noted that while plan loans are comparatively easier to manage through design controls, hardship withdrawals present a greater challenge under self-certification. His recommendations centered on proactive plan design guardrails—such as limiting or eliminating loans, restricting participants to a single outstanding loan, implementing cooling-off periods between loans, and permitting loans only from employee contributions rather than employer funds. Together, these strategies reflect a growing need for sponsors and advisors to reassess plan design and participant education to balance flexibility with the long-term objective of preserving retirement security.
Read the Full Transcript Here:
Fred Barstein:
This is Fred Barstein, CEO and founder of The Plan Sponsor University, and we’ve just completed a program here in Nashville. I’m joined by our adjunct lecturer, Steve Glasgow. Welcome, Steve.
Steve Glasgow:
Thanks, Fred. Great to be here.
Fred Barstein:
Let’s start by telling our audience a little bit about yourself and your firm.
Steve Glasgow:
Sure. I’m with HUB International. I’ve been there just under a year. We work primarily with qualified retirement plans, and we also have a small wealth practice. Our firm has been in this space for about 30 years.
Fred Barstein:
Very good. One of our wholesalers or plan sponsors joked that he sold Moses his first plan.
Steve Glasgow:
You might have.
Fred Barstein:
Today we heard a lot of questions about loans and hardship withdrawals. What are you seeing, and what are you recommending to clients?
Steve Glasgow:
It’s interesting because this topic has come up more frequently, especially with SECURE 2.0. The ability for participants to self-certify hardships—something most plans already allow—has changed the dynamic.
Loans are one thing because they’re easier to control. Hardship distributions are tougher. What we’re hearing from many clients, and what came up today, is that self-certification has significantly increased distribution activity. From our perspective, plan leakage is the concern. As more people understand they can self-certify, word spreads, and it becomes a real issue—especially if financial conditions tighten.
Fred Barstein:
So when it comes to loans, how are you recommending sponsors design their loan programs?
Steve Glasgow:
We’re big fans of no loans, though we understand that’s not always realistic. At a minimum, we recommend limiting plans to a single loan rather than multiple loans. If a participant pays off a loan, we like to see a cooling-off period of at least six months before a new one can be taken.
We’ve also had success—depending on the industry—limiting loans to employee contributions only, excluding employer contributions. These design choices can help discourage behaviors that, in aggregate, aren’t great for long-term outcomes.
Fred Barstein:
Do you recommend limiting loans or hardships to specific qualifying reasons?
Steve Glasgow:
It’s certainly a recommendation. Historically, hardships required documentation for things like medical emergencies or first-time home purchases. With self-certification, that line has blurred. Sponsors really need to think carefully, because these changes will likely result in increased plan leakage.
Fred Barstein:
Final question—this is your first program as an adjunct lecturer, so thank you. Why should a plan sponsor attend a TPSU program?
Steve Glasgow:
TPSU provides strong educational content—both foundational fiduciary education and timely, contemporary issues. Just as important is the opportunity for peer-to-peer discussion. Sponsors get to hear what others are dealing with, what’s working, and what’s not. That shared insight is incredibly valuable.
Fred Barstein:
Absolutely. The peer-to-peer conversations—especially over lunch—are always the highlight. Steve, thanks for being a lecturer and for your support. And thank you for watching 401kTV. Please stay tuned.
