Retirement plan loans, hardship distributions for Louisiana flood victims

Retirement plan loans, hardship distributions

The IRS today issued an advance version of Announcement 2016-30 to provide relief for victims of the Louisiana storms and flooding that began August 11, 2016.

Related content

Announcement 2016-30 permits easier access to victims’ funds held in workplace retirement plans and in IRAs, for the period beginning August 11, 2016, and ending January 17, 2017. This relief is in addition to the relief previously provided by the IRS. Read TaxNewsFlash-United States

Loans, hardship distributions

In a related release (IR-2016-115), the IRS announced that retirement plans—401(k) plans and similar employer-sponsored retirement plans—can make loans and hardship distributions to Louisiana flood victims and members of their families. Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, and state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these “streamlined loan procedures and liberalized hardship distribution rules.” As noted in the IRS release, while IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

Retirement plans can provide relief to employees and certain members of their families who live or work in the disaster area. To qualify for this relief, hardship withdrawals must be made by January 17, 2017.

The IRS also announced it was relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG's new digital platform