IRS Eliminates Normal Process For Hardship Withdrawals From Certain Retirement Plans For Those Affected By Sandy

Tuesday, November 20, 2012 08:25
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IRS Eliminates Normal Process For Hardship Withdrawals From Certain Retirement Plans For Those Affected By Sandy

Tags: 401(k) | disaster recovery | Internal Revenue Service

The Internal Revenue Service has made an exception to make it easier for victims of Superstorm Sandy to access retirement funds without having to follow procedures normally required for hardship withdrawals.

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Administrators of 401(K) and other qualified plans may now grant loan requests even if the plan documents do not include loan provisions.
 
The maximum allowable amount for a hardship distribution is whatever funds are available. The qualified plans include 403(b) and 457(d) plans in addition to the 401(k) plans offered by employers. 
 
The aid is provided for anyone with a primary residence or place of employment in a covered disaster area.
 
A relative of a person affected by the storm that hit the New Jersey shore October 29 would also be allowed to withdraw funds to help a spouse, parent, grandparent, child, or other relative.
 
IRA holders cannot take out loans but their financial institutions may make IRA distributions under the relief. To see the actual IRS announcement, go here.

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