IRS extends plan hardship withdrawal relief to victims of recent hurricanes

Tax Hot Topics newsletterThe IRS advised in IR-2018-236 that 401(k) plans and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of hurricanes Michael and Florence and to members of their families. This relief was included in the preamble to proposed regulations (REG-107813-18) issued in November implementing several recent law changes that affect hardship withdrawals.

Retirement plans can provide relief to employees and some members of their families who live or work in disaster areas affected by hurricanes Michael or Florence, as well as in other designated areas. Plans will be permitted to make loans or hardship distributions before the plan is formally amended to provide for this assistance. Qualified plans may also ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. Plans may also relax requirements for providing documentation before distributions from the plan are made. To qualify for relief, hardship withdrawals must be made by March 15, 2019.

Jeff Martin
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
T +1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
T +1 202 861 4107

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