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previous page Previous Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Net Operating Losses
next page Next Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Additional Tax Relief for Businesses
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p4492a-004.htm#en_us_publink100016316

IRAs and Other Retirement Plans(p3)


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previous topic occurrence IRAs and Other Retirement Plans next topic occurrence

New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for individuals who suffered economic losses as a result of the storms and tornadoes.
taxmap/pubs/p4492a-004.htm#en_us_publink100016317

Definitions(p3)


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taxmap/pubs/p4492a-004.htm#en_us_publink100016318

Qualified recovery assistance distribution.(p3)


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Except as provided below, a qualified recovery assistance distribution is any distribution you received and designated as such from an eligible retirement plan if all of the following apply.
  1. The distribution was made after May 3, 2007, and before January 1, 2009.
  2. Your main home was located in the Kansas disaster area on May 4, 2007.
  3. You sustained an economic loss because of the storms and tornadoes. Examples of an economic loss include, but are not limited to:
    1. Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause;
    2. Loss related to displacement from your home; or
    3. Loss of livelihood due to temporary or permanent layoffs.
If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified recovery assistance distribution, regardless of whether the distribution was made on account of the storms and tornadoes. Qualified recovery assistance distributions are permitted without regard to your need or the actual amount of your economic loss.
The total of your qualified recovery assistance distributions from all plans is limited to $100,000. If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose.
A reduction or offset after May 3, 2007, of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified recovery assistance distribution.
taxmap/pubs/p4492a-004.htm#en_us_publink100016319

Eligible retirement plan.(p3)


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An eligible retirement plan can be any of the following.
taxmap/pubs/p4492a-004.htm#en_us_publink100016320

Main home.(p3)


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Generally, your main home is the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home.
taxmap/pubs/p4492a-004.htm#en_us_publink100016321

Taxation of Qualified Recovery Assistance Distributions(p3)


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Qualified recovery assistance distributions are included in income in equal amounts over three years. However, if you elect, you can include the entire distribution in your income in the year it was received.
Qualified recovery assistance distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). However, any distributions you receive in excess of the $100,000 qualified recovery assistance distribution limit may be subject to the additional tax on early distributions.
For more information, see How To Report Qualified Recovery Assistance Distributions on page 4.
taxmap/pubs/p4492a-004.htm#en_us_publink100016322

Repayment of Qualified Recovery Assistance Distributions(p3)


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If you choose, you generally can repay any portion of a qualified recovery assistance distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. Also, you can repay a qualified recovery assistance distribution made on account of a hardship from a retirement plan. However, see Exceptions below for qualified recovery assistance distributions you cannot repay.
You have three years from the day after the date you received the distribution to make a repayment. Amounts that are repaid are treated as a qualified rollover and are not included in income. Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. See Form 8915 for more information on how to report repayments.
taxmap/pubs/p4492a-004.htm#en_us_publink100016323

Exceptions.(p4)


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You cannot repay the following types of distributions.
  1. Qualified recovery assistance distributions received as a beneficiary (other than a surviving spouse).
  2. Required minimum distributions.
  3. Periodic payments (other than from an IRA) that are for:
    1. A period of 10 years or more,
    2. Your life or life expectancy, or
    3. The joint lives or joint life expectancies of you and your beneficiary.
taxmap/pubs/p4492a-004.htm#en_us_publink100011002

How To Report Qualified Recovery Assistance Distributions(p4)


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previous topic occurrence How To Report Qualified Recovery Assistance Distributions next topic occurrence

Deposit
You will need the following information to correctly report any 2007 or 2008 qualified recovery assistance distributions.
taxmap/pubs/p4492a-004.htm#en_us_publink100011004

2007 Qualified Recovery Assistance Distributions(p4)


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2007 Qualified Recovery Assistance Distributions

If you received a distribution after May 3, 2007, from an eligible retirement plan, you may be able to designate it as a qualified recovery assistance distribution. See Qualified recovery assistance distribution on page 3.
If you have not filed your 2007 income tax return, see Form 8915 and Form 8606 on this page to see how to complete these forms for any qualified recovery assistance distributions. Be sure to attach Form 8915 and Form 8606 (if required) to your 2007 income tax return.
If you have filed your 2007 income tax return, you will need to amend your return to designate any distributions as qualified recovery assistance distributions. You can amend your 2007 income tax return by using Form 1040X. You will need to complete and attach Form 8915 and Form 8606 (if required) to your amended income tax return for any qualified recovery assistance distributions. See Form 8915 and Form 8606 on this page.
taxmap/pubs/p4492a-004.htm#en_us_publink100011006

Form 8915.(p4)


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For a 2007 qualified recovery assistance distribution, complete the 2005 Form 8915, Qualified Hurricane Retirement Plan Distributions and Repayments. Before you complete the form, modify the form as follows.
You can now complete Form 8915. For the instructions, use the applicable dates and terms in this publication instead of those used in the 2005 Form 8915 instructions. See Example 1 on page 5 to see how to complete Form 8915.
taxmap/pubs/p4492a-004.htm#en_us_publink100011007

Form 8606.(p4)


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For a 2007 qualified recovery assistance distribution, complete or amend the 2007 Form 8606, Nondeductible IRAs. Before you complete or amend the form, use the following additional instructions.
taxmap/pubs/p4492a-004.htm#en_us_publink100011008

Form 8606, Part I.(p4)
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  1. On line 6, subtract any repayments of qualified recovery assistance distributions from the amount you would otherwise enter on line 6. Do not enter an amount less than -0-.
  2. Include on line 7 the amount of any qualified recovery assistance distributions that you received even if they were later repaid.
  3. Complete line 15 as follows.
    1. If all of your distributions are qualified recovery assistance distributions, enter the amount from line 15 on Form 8915, line 13. Do not enter this amount on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b.
    2. If you have qualified recovery assistance distributions as well as other distributions, you will need to multiply the amount on line 15 by a fraction. The numerator of the fraction is your total qualified recovery assistance distributions and the denominator is the amount from Form 8606, line 7. Enter the result in the white space in the bottom margin of the form under line 15. To the left of this amount, enter "Qualified recovery assistance distributions" and also enter this amount on Form 8915, line 13. Then, subtract this amount from the amount on line 15 and include the result on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. Also, enter this amount on Form 8606 under your qualified recovery assistance distributions. To the left of this amount, enter "Other distributions."
taxmap/pubs/p4492a-004.htm#en_us_publink100011009

Form 8606, Part III.(p5)
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  1. Include on line 19 the amount of any qualified recovery assistance distributions that you received even if they were later repaid.
  2. Complete line 25 as follows.
    1. If all of your distributions are qualified recovery assistance distributions, enter the amount from line 25 on Form 8915, line 14. Do not enter this amount on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b.
    2. If you have qualified recovery assistance distributions as well as other distributions, you will need to multiply the amount on line 25 by a fraction. The numerator of the fraction is your total qualified recovery assistance distributions and the denominator is the amount from Form 8606, line 21. Enter the result in the white space in the bottom margin of the form under line 25. To the left of this amount, enter "Qualified recovery assistance distributions" and also enter this amount on Form 8915, line 14. Then, subtract this amount from the amount on line 25 and include the result on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. Also, enter this amount on Form 8606 under your qualified recovery assistance distributions. To the left of this amount, enter "Other distributions."
taxmap/pubs/p4492a-004.htm#en_us_publink100011013

Example 1.(p5)


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On May 4, 2007, Margaret Maple lost her home due to the tornadoes on that day. Her home was located in the Kansas disaster area. On July 31, 2007, Margaret took out $30,000 from her 401(k) plan and an additional $15,000 from her traditional IRA in order to rebuild her home. Margaret has not filed her 2007 return yet but would like to designate the $45,000 in distributions from her retirement plans as qualified recovery assistance distributions. Since the distributions occurred in 2007, Margaret would modify and complete the 2005 Form 8915 as discussed on page 4. Margaret would also need to complete Form 8606 since her distribution from her traditional IRA has nondeductible contributions from previous years.
In addition to the $15,000 qualified recovery assistance distribution on July 31, 2007, Margaret received an additional distribution of $15,000 from her traditional IRA on October 31, 2007, that she did not designate as a qualified recovery assistance distribution. Because Margaret has a qualified recovery assistance distribution as well as a distribution not so designated, Margaret must allocate the amount on Form 8606, line 15 to both distributions, as discussed earlier. Margaret's qualified recovery assistance distributions are $13,125 ($26,250 × $15,000 ÷ $30,000). Margaret enters in the white space in the bottom margin of Form 8606, the following, "Qualified recovery assistance distributions $13,125." This amount is then reported on Form 8915, line 13. Below this entry, Margaret enters "Other distributions $13,125," and includes this amount on Form 1040, line 15b. See Margaret's modified 2005 Form 8915 and 2007 Form 8606 shown on pages 6 through 8. taxmap/pubs/p4492a-004.htm#en_us_publink100021575
taxmap/pubs/p4492a-004.htm#TXMP4b272f15
2005 Form 8915, page 1, Illustrated Example 1. Text Description2005 Form 8915, page 1, Illustrated Example 1.  
taxmap/pubs/p4492a-004.htm#en_us_publink100021576
taxmap/pubs/p4492a-004.htm#TXMP2dd18151
2005 Form 8915, page 2, Illustrated Example 1 Text Description2005 Form 8915, page 2, Illustrated Example 1  
taxmap/pubs/p4492a-004.htm#en_us_publink100021577
taxmap/pubs/p4492a-004.htm#TXMP4c4aeb0e
Form 8606, page 1, Illustrated Example 1 Text DescriptionForm 8606, page 1, Illustrated Example 1  
taxmap/pubs/p4492a-004.htm#en_us_publink100011010

2008 Qualified Recovery Assistance Distributions(p5)


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2008 Qualified Recovery Assistance Distributions

If you received a distribution in 2008 from an eligible retirement plan, you may be able to designate it as a qualified recovery assistance distribution. See Qualified recovery assistance distribution on page 3. You will need to complete and attach Form 8915 and Form 8606 (if required) to your 2008 income tax return for any qualified recovery assistance distributions. See Form 8915 and Form 8606 below.
taxmap/pubs/p4492a-004.htm#en_us_publink100011011

Form 8915.(p5)


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For a 2008 qualified recovery assistance distribution, you will need to complete the 2006 Form 8915. Before you complete the form, modify the form as follows.
  • Cross out "Hurricane" in the title at the top of the form and enter "Recovery Assistance." To the right of the title, cross out "2006" and enter "2008."
  • In the first sentence of Part I and on line 1, cross out "hurricane" and enter "recovery assistance," cross out "2006" and enter "2008," and cross out "2005" and enter "2007." At the top of column (a) cross out "2006" and enter "2008."
  • In Part II, cross out "Hurricane" in the title and enter "Recovery Assistance." On lines 12, 14, and 15, cross out "2005" and enter "2007." On lines 17 and 19, cross out "2006" and enter "2008."
  • In Part III, cross out "Hurricane" in the title and enter "Recovery Assistance." On line 21, cross out "hurricane" and enter "recovery assistance." On lines 22 and 23, cross out "line 15b" and "line 25b." On lines 27, 29, and 30, cross out "2005" and enter "2007." On lines 32 and 34, cross out "2006" and enter "2008."
You can now complete Form 8915. For the instructions, use the applicable dates and terms in this publication instead of those used in the 2006 Form 8915 instructions.
taxmap/pubs/p4492a-004.htm#en_us_publink100011014

Example 2.(p5)
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On June 15, 2008, Margaret Maple, from the previous example, took out $15,000 from her 401(k) plan that she is designating as a qualified recovery assistance distribution. Since the distribution occurred in 2008, Margaret would modify and complete the 2006 Form 8915 as discussed above. Also, since Margaret is including her 2007 recovery assistance distributions in income over 3 years, she reports the applicable amount of those distributions on the modified 2006 Form 8915. See Margaret's modified 2006 Form 8915 shown on pages 9 and 10. taxmap/pubs/p4492a-004.htm#en_us_publink100021589
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2006 Form 8915, page 1, Illustrated Example 2 Text Description2006 Form 8915, page 1, Illustrated Example 2  
taxmap/pubs/p4492a-004.htm#en_us_publink100021590
taxmap/pubs/p4492a-004.htm#TXMP3b4ddb9c
2006 Form 8915, page 2, Illustrated Example 2 Text Description2006 Form 8915, page 2, Illustrated Example 2  
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Form 8606.(p5)


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For a 2008 qualified recovery assistance distribution, you may need to complete the 2008 Form 8606. Before you complete Form 8606, use the additional instructions outlined in Form 8606, Part I, on page 4 and Form 8606, Part III, on this page.
taxmap/pubs/p4492a-004.htm#en_us_publink100016324

Repayment of Qualified Distributions for the Purchase or Construction of a Main Home(p11)


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If you received a qualified distribution to purchase or construct a main home in the Kansas disaster area, you can repay part or all of that distribution after May 3, 2007, but no later than October 22, 2008, to an eligible retirement plan. For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made.
To be a qualified distribution, the distribution must meet all of the following requirements.
  1. The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA.
  2. The distribution was received after November 4, 2006, and before May 5, 2007.
  3. The distribution was to be used to purchase or construct a main home in the Kansas disaster area that was not purchased or constructed because of the storms and tornadoes.
Amounts that are repaid before October 23, 2008, are treated as a qualified rollover and are not included in income. Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover.
A qualified distribution not repaid before October 23, 2008, may be taxable for 2006 or 2007 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions.
You must file Form 8915 if you received a qualified distribution that you repaid, in whole or in part, before October 23, 2008. See How to report, next, for information on completing Form 8915.
taxmap/pubs/p4492a-004.htm#en_us_publink100011973

How to report.(p11)


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To report the repayment of a qualified distribution for the purchase or construction of a main home that was not purchased or constructed due to the storms and tornadoes, use the 2005 Form 8915, Part IV. Before you complete the form, modify the form as follows.
  • Cross out "Hurricane" in the title at the top of the form and enter "Recovery Assistance." To the right of the title, cross out "2005" and enter "2006" or "2007." Enter only the year the distribution was received.
  • Cross out "Hurricane" in the title of Part IV and enter "Kansas."
  • In the sentence below the title of Part IV, cross out "March 1, 2006" and enter "October 23, 2008."
  • On line 24, cross out "March 1, 2006" and enter "October 23, 2008."
You can now complete Part IV of Form 8915. Use the applicable dates and terms in this publication instead of those used in the 2005 Form 8915 instructions to complete the form. Attach Form 8915 to your original or amended return for the year of the distribution.
taxmap/pubs/p4492a-004.htm#en_us_publink100020702

Amended return.(p11)


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If you repay part or all of a qualified distribution by October 22, 2008, you will need to file an amended return for that part of a distribution that was previously included in income.
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Loans From Qualified Plans(p11)


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The following benefits are available to qualified individuals.
  • Increases to the limits for distributions treated as loans from employer plans.
  • A 1-year suspension for payments due on plan loans.
taxmap/pubs/p4492a-004.htm#en_us_publink100016326

Qualified individual.(p11)


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You are a qualified individual if your main home on May 4, 2007, was located in the Kansas disaster area and you had an economic loss because of the storms and tornadoes. Examples of an economic loss include, but are not limited to:
  • Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause;
  • Loss related to displacement from your home; or
  • Loss of livelihood due to temporary or permanent layoffs.
taxmap/pubs/p4492a-004.htm#en_us_publink100016327

Limits on plan loans.(p11)


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The $50,000 limit for distributions treated as plan loans is increased to $100,000. In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. If your home was located in the Kansas disaster area, the higher limits apply only to loans received during the period beginning on May 22, 2008, and ending on December 31, 2008.
taxmap/pubs/p4492a-004.htm#en_us_publink100016328

One-year suspension of loan payments.(p11)


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Payments on plan loans outstanding after May 3, 2007, may be suspended for 1 year by the plan administrator. To qualify for the suspension, the due date for any loan payment must occur during the period beginning on May 4, 2007, and ending on December 31, 2008.
previous pagePrevious Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Net Operating Losses
next pageNext Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Additional Tax Relief for Businesses
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication