Special IRA Rules For Federally Declared Disasters
When there is a federally declared disaster in the United States, special IRA rules come into play. This refers to a natural disaster, a terrorist attack, or any other situation for which a Presidential declaration of a major disaster is issued under Section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
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. Effective Date: Effective for disasters occurring on or after January 26, 2021.