Financial Advice From Councilman Mayoka
Councilman Mark Mayoka Advises Residents that the IRS will be allowing hardship distributions from retirement plans to Sandy victim.
The IRS announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Sandy and members of their families. 401 (k) plan participants, 403 (b) tax sheltered annuities and state and government employees with 457 (b) may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. IRA participants are barred from taking out loans but may be eligible to receive distributions under liberalized procedures.
To qualify for this relief, Hardship withdrawals must be made by February 1, 2013.
This broad based relief means that a retirement plan can allow a Sandy victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside of the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.
The IRS announcement provides relief to taxpayers who have been adversely affected by Hurricane Sandy and have retirement assets in qualified employer plans they would like to use to alleviate hardships. This announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.
Further details are in Announcement 2012-44 posted on IRS.gov.
By Allison Lewin (Legislative Aide to Councilman Mayoka)