Section 113 of the SECURE Act establishes qualified birth or adoption distributions (QBOADS) which allow for distributions up to $5,000 for a qualified birth or adoption. The retirement plan industry loves a good acronym so we will have to see if QBOADS sticks. For plan sponsors, the benefit of this type of distribution is it can be perceived as an added employee perk and it eliminates the 10% early distribution tax.
Your vendor will produce the 1099-R so employers won’t have to worry about this too much from an operations stand point. The key for each plan sponsor to evaluate is whether adding this feature to their plan is worth the communications effort that already overwhelmed HR departments will be tasked with. Looking at your plans demographics will also help to determine whether this feature would be likely utilized by plan participants.