IRS Announces Retirement Plan Loans, And Hardship Distributions To Hurricane Victims
Release Date: October 24, 2005
Release Number: 1603-109
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BATON ROUGE, La. -- For the first time in history, the Internal Revenue Service (IRS) and the Departments of the Treasury and Labor are providing broad-based relief to retirement plan participants affected by a major disaster.
Residents who participate in 401(k) and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Katrina and members of their families. Eligible affected residents with a retirement plan will be able to access their money quickly and with a minimal amount of red tape. The six-month ban on 401(k) contributions that normally affects employees who take hardship distributions will not apply.
This broad-based relief plan basically will allow an employee affected by the hurricane to take a hardship distribution or borrow up to a specified amount from their retirement plan. It also will let someone in an unaffected area take out a retirement plan loan or hardship distribution to assist a child, parent, grandparent, or other dependent who lived or worked in a disaster area.
Retirement plan loan proceeds are tax-free if they are repaid within five years. To qualify for this tax relief option, hardship withdrawals must be made by Mar. 31, 2006. For more information, call the IRS Helpline at 1-866-562-5227, or log onto the Web site at www.irs.gov and click on “Disaster Relief.”
FEMA prepares the nation for all hazards and manages federal response and recovery efforts following any national incident. FEMA also initiates mitigation activities, trains first responders, works with state and local emergency managers, and manages the National Flood Insurance Program and the U.S. Fire Administration. FEMA became part of the U.S. Department of Homeland Security on March 1, 2003.
Last Modified: Monday, 24-Oct-2005 09:49:34