Save time with our cheat sheets, fact sheets, checklists & books!

October 24, 2016

Relief for Victims of Hurricane Matthew-IRS Announcement 2016-39

Share on print
Print
Share on facebook
Share on twitter
Share on pinterest
Share on linkedin

The IRS issued Announcement 2016-39, in which they provide relief to taxpayers who have been adversely affected by Hurricane Matthew and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by Hurricane Matthew.

The announcement also provides relief from certain verification procedures that may be required under retirement plans for loans and hardship distributions.

Waivers

  • An employer that sponsors a qualified plan, 403(b) plan or governmental 457(b) plan may allow participants to make withdrawals or loans, by waiving the following requirements:
  • The restriction that permits elective deferrals to be distributed only in certain situations, one of which is on account of hardship.
  • The restriction that permits distributions from 457(b) plans only in certain situations upon the occurrence of certain enumerated events, one being when the participant is faced with an unforeseeable emergency.
  • The restriction that prohibits certain other types of plans ( example pension plans) or accounts ( such as accounts holding qualified nonelective contributions (“QNECs”) or qualified matching contributions (“QMACs”) ) from making in-service distributions (distributions to a participant who is still an employee) even if there is a hardship.
  • The restriction that requires a plan to contain language authorizing loans or distributions, in order to make a loan or distribution (including a hardship distribution),
  • The requirements, including the verification process that an employee must satisfy in order to be eligible for a hardship distribution.

The normal spousal consent rules continue to apply

See Announcement 2016-39  for details

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Share on print
More

Keep Learning

Annual Benefit Limit

Definition The annual benefit limit for defined benefit plans is the lesser of: A) 100% of the participant’s average compensation for his or her highest

Be among the first to know when

IRA Rules
Change