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September 21, 2017

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IRS Allows Easier Access to Retirement Plan Funds for Hurricane Irma Victims

We previously posted regarding the retirement plan relief provided by the Internal Revenue Service (IRS) for victims of Hurricane Harvey pursuant to Announcement 2017-11. The IRS extended the same relief to victims of Hurricane Irma in Announcement 2017-13. The relief relaxes the rules that normally apply to restrict a plan participant’s access to qualified retirement plan funds. The relief is available to a plan participant who, on Sept. 4, 2017, had a principal residence or work location (or whose lineal ascendant or descendant had a principal residence or work location) in one of the Florida counties identified for assistance by the Federal Emergency Management Agency (FEMA) due to the devastation caused by Hurricane Irma.  These counties are identified on FEMA’s website

A plan may rely on the representations made by a participant as to the need for and amount of a hardship distribution, unless the plan has actual knowledge that the representation is not true. The amount available for a hardship distribution is limited to the amount that would otherwise be permitted for a hardship distribution. However, the reason for taking the distribution applies to any hardship (not just the current ones available for a 401(k) plan hardship withdrawal), and the post-distribution suspension of participant contributions (typically 6 months) does not apply.

If a plan makes Hurricane Irma withdrawals or loans available, the plan must be amended by the end of the first plan year beginning after Dec. 31, 2017, to permit the withdrawals or loan.  In addition, a hardship distribution must be made on account of a hardship resulting from Hurricane Irma and be made on or after Sept. 4, 2017, and no later than Jan. 31, 2018, and a loan must comply with the rules that otherwise apply to qualified plan loans.

If a Hurricane Irma loan or hardship withdrawal is made, the plan will not be treated as failing to follow the normal documentation rules, as long as the plan administrator makes a good-faith diligent effort to comply with the requirements and makes a reasonable attempt to secure the required documentation as soon as possible.

Let’s hope this is the last guidance needed from the IRS regarding hurricane relief.

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About this Author

Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation.
Partner

Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation. She advises a wide range of clients, including closely-held companies, tax-exempt organizations and public companies.

Sarah brings over 17 years of experience to the firm and partners with clients to establish, design and implement qualified retirement plans, non-qualified arrangements, welfare and fringe benefit plans, and executive compensation programs. She also guides clients through plan audits and service provider changes.

 

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