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EBSA News Release: [11/29/2005]
Contact Name:
David James or Gloria Della
Phone Number: (202) 693-4676 or x8664
Release
Number: 05-2188-NAT
U.S. Labor Department Acts to Improve Access of Hurricane Victims
To 401(k) Loans and Withdrawals
WASHINGTON — Today the U.S. Department of Labor's Employee Benefits Security Administration (EBSA), along with the Internal Revenue Service (IRS), announced guidance for employers and plan officials relating to changes in the law that increase the amount of loan distributions permitted through 401(k) and similar employer-sponsored plans to participants affected by Hurricane Katrina.
Under the Katrina Emergency Tax Relief Act of 2005 (KETRA), participants adversely affected by the hurricane receive special tax treatment for certain qualified plan distributions. KETRA also increases the limits under the Internal Revenue Code on the amounts of plan loans that may be made to participants affected by the hurricane. The new law covers eligible distributions made between Aug. 25, 2005 and Jan. 1, 2007. The agencies are issuing guidance for employers and individuals relating to the application of the distribution and loan provisions of KETRA.
“Helping Hurricane Katrina's survivors get back on their feet is our highest priority,” said Secretary of Labor Elaine L. Chao. “These actions give employers and their workers more latitude in making withdrawals and loans from 401(k)s and similar plans so they can begin rebuilding their lives.”
As stated in IRS Notice 2005-92, the Department of Labor will not treat any person as having violated the provisions of Title I of the Employee Retirement Income Security Act, including the requirements that plan loans be available on a reasonably equivalent basis and be adequately secured, solely because they made a plan loan to a qualified individual in compliance with the provisions of KETRA. IRS Notice 2005-92 explains the circumstances under which distributions and loans can be made from a plan to participants and beneficiaries affected by the hurricane.
For more information on Hurricane Katrina relief, contact the department at 1-866-4USA-DOL or EBSA at 1-866-444-3272. Questions about the IRS announcement should be directed to the IRS at 1-877-829-5900.
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