Special Rules Federally Declared Disasters
SECURE 2.0 Act Section 331 provides permanent rules relating to the use of retirement funds in the case of a federally declared disaster.
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The permanent rules allow up to $22,000 to be distributed from employer retirement plans or IRAs for affected individuals.
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Such distributions are not subject to the 10% additional tax and are considered as gross income over 3 years.
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Distributions can be repaid to a tax preferred retirement account.
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Additionally, amounts distributed prior to the disaster to purchase a home can be recontributed.
An employer is permitted to provide for a larger amount to be borrowed from a plan by affected individuals and for additional time for repayment of plan loans owed by affected individuals.
Effective Date: Effective for disasters occurring on or after January 26, 2021.