The IRS today issued a release as a reminder that section 401(k) plans and similar employer-sponsored retirement plans may be eligible to make loans and hardship distributions to taxpayers who were victims of Hurricane Michael and Hurricane Florence and to members of their families.
The relief was included in proposed regulations issued earlier this month, to implement several recent law changes that affect hardship withdrawals. Read TaxNewsFlash
According to today’s IRS release (IR-2018-236), participants in section 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with section 457(b) deferred-compensation plans may now be eligible to take advantage of these “streamlined loan procedures and liberalized hardship distribution rules.” While IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster areas affected by Hurricane Michael or Florence and designated for individual assistance by FEMA. As noted by the IRS, parts of Florida, Georgia, North Carolina, and South Carolina are eligible disaster areas. To qualify for this relief, hardship withdrawals must be made by March 15, 2019.
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