October 6, 2017
By Mike Murphy, FiduciaryShield – Many individuals and families are feeling the personal and financial impacts of hurricanes Harvey and Irma. In an effort to provide some relief, the IRS recently announced a ruling that will allow taxpayers in affected areas to access their 401(k) assets for hardships caused by hurricane damage.
401(k) plans will be considered in compliance when granting loans and hardship distributions to employees who need assistance rebuilding their homes and lives following the storms. For these distributions, the 10% early withdrawal penalty will also be waived.
Tax relief for hurricane Harvey is potentially available to residents and business owners in the following counties if applied for after August 22nd, 2017:
Aransas, Austin, Bastrop, Bee, Bexar, Brazoria, Burleson, Calhoun, Chambers, Colorado, Dallas, De Witt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Madison, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tarrant, Travis, Tyler, Victoria, Walker, Waller, Washington, and Wharton
The IRS is offering similar relief for those affected by Hurricane Irma. Per FEMA designations, residents in all 67 counties of Florida and all 159 counties in Georgia may qualify for distributions applied for after Sep 4th, 2017.
The IRS has also extended filing deadlines for form 5500 for plans in the qualifying areas of both hurricanes until Jan 31, 2018.
Not to be outdone by the IRS, labor secretary Alexander Acosta issued the following statement:
“We realize that employers and employees impacted by Hurricanes Harvey and Irma will need assistance in dealing with employee benefits issues arising from disruptions in banking and payroll processing,”
This statement confirms that the Department of Labor (DOL) understands the after effects of these hurricanes may cause issues in efforts to comply with ERISA rules. The DOL and has provided additional relief guidance for those impacted by the storms.
Mike Murphy is vice president of ERISA consulting at FiduciaryShield, a retirement plan fiduciary administrator and compliance company.
Topics: #401(k) #Fiduciary #Hurricane #401(k)Fiduciary #5500