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IRS ALLOWS KATRINA WITHDRAWALS FROM RETIREMENT PLANS

September 16, 2005

The IRS has granted qualified plans blanket permission to make hardship distributions or loans to disaster-area residents (Announcement 2005-70). The relief also applies for those with relatives affected by the disaster, per the announcement:

A qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Katrina, to an employee or former employee whose principal residence on August 29, 2005, was located in one of the counties or parishes in Louisiana, Mississippi or Alabama that have been or are later designated as disaster areas eligible for Individual Assistance by the Federal Emergency Management Agency because of the devastation caused by Hurricane Katrina or whose place of employment was located in one of these counties or parishes on such date or whose lineal ascendant or descendant, dependent or spouse had a principal residence or place of employment in one of these counties or parishes on such date. Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and such distribution is treated as a hardship distribution for all purposes under the Code and regulations.

The Tax Prof has posted a comprensive set of Katrina relief links.

Don't forget the Katrina Benefit tonight at Biaggi's in West Des Moines.

LINK: Tax Update Summary of Katrina relief.

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