The following discussions cover many of the special rules regarding withdrawals and repayments from certain retirement plans. These rules provided relief to taxpayers who suffered an economic loss as a result of Hurricane Katrina, Rita, or Wilma and applied to distributions received before 2007 as qualified hurricane distributions (defined later). However, they may still affect taxpayers after 2007. For example, they explain how much of a qualified distribution may have to be included in income after 2007 and when an amended return must be filed to reduce the amount of a qualified distribution previously included in income as a result of repayments made after 2007.
If you received a qualified hurricane distribution, the taxable amount is figured in the same manner as other distributions (see the sections on Cost, Taxation of Periodic Payments, and Taxation of Nonperiodic Payments, earlier). However, the distribution is included in income ratably over 3 years beginning with the year you received the distribution, unless you elected to report the entire amount in the year of distribution. You can repay the distribution and not be taxed on the distribution. See Qualified Hurricane Distributions, later.
Form 8915, Qualified Hurricane Retirement Plan Distributions and Repayments, is used to report repayments of qualified hurricane distributions and to figure the taxable amount of your qualified hurricane distributions.
For information on other tax provisions related to these hurricanes, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma.taxmap/pubs/p575-007.htm#en_us_publink10004574
If you received a qualified hurricane distribution, you must include it in your income in equal amounts over 3 years. For example, if you received a $60,000 qualified hurricane distribution in 2006, you had to include $20,000 in your income in 2006 and would include in income the same amount in 2007 and 2008. However, you could have elected to include the entire distribution in your income in the year it was received.
A qualified hurricane distribution was any distribution you received from an eligible retirement plan if all of the following conditions applied.
- The distribution was made:
- After August 24, 2005, and before January 1, 2007, for Hurricane Katrina.
- After September 22, 2005, and before January 1, 2007, for Hurricane Rita.
- After October 22, 2005, and before January 1, 2007, for Hurricane Wilma.
- Your main home was located in a qualified hurricane disaster area listed below on the date shown for that area.
- August 28, 2005, for the Hurricane Katrina disaster area. For this purpose, the Hurricane Katrina disaster area included the states of Alabama, Florida, Louisiana, and Mississippi.
- September 23, 2005, for the Hurricane Rita disaster area. For this purpose, the Hurricane Rita disaster area included the states of Louisiana and Texas.
- October 23, 2005, for the Hurricane Wilma disaster area. For this purpose, the Hurricane Wilma disaster area included the state of Florida.
- You sustained an economic loss because of Hurricane Katrina, Rita, or Wilma and your main home was in that hurricane disaster area on the date shown in item (2) for that hurricane. Examples of an economic loss included, but were not limited to (a) loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; (b) loss related to displacement from your home; or (c) loss of livelihood due to temporary or permanent layoffs.
If you met all these conditions, you could generally have designated any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified hurricane distribution, regardless of whether the distribution was made on account of Hurricane Katrina, Rita, or Wilma. Qualified hurricane distributions were permitted without regard to your need or the actual amount of your economic loss.
A reduction or offset (before 2007 and after August 24, 2005, for Katrina; after September 22, 2005, for Rita; or after October 22, 2005, for Wilma) of your account balance in an eligible retirement plan to repay a loan could also have been designated as a qualified hurricane distribution.taxmap/pubs/p575-007.htm#en_us_publink10004575
An eligible retirement plan could have been any of the following.
- A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan).
- A qualified annuity plan.
- A tax-sheltered annuity contract.
- A governmental section 457 deferred compensation plan.
- A traditional, SEP, SIMPLE, or Roth IRA.
For more information, including information about a distribution limit and a definition of main home, see the Form 8915 instructions.
Most qualified hurricane distributions are eligible for repayment to an eligible retirement plan. Payments received as a beneficiary (other than a surviving spouse), periodic payments (other than from IRAs), and required minimum distributions are not eligible for repayment. Periodic payments, for this purpose, are payments that are for (a) a period of 10 years or more, (b) your life or life expectancy, or (c) the joint lives or joint life expectancies of you and your beneficiary. For distributions eligible for repayment, you have 3 years from the day after the date you received the distribution to repay all or part to any plan, annuity, or IRA to which a rollover can be made. Within the time allowed, you may make as many repayments as you choose. The total amount repaid cannot be more than the amount of your qualified hurricane distributions. Amounts repaid are treated as a qualified rollover and are not included in income. The way you report repayments depends on whether you reported the distributions under the 3-year ratable method, or you elected to report the distributions in the year of distribution.taxmap/pubs/p575-007.htm#en_us_publink10004577
If you elected to include all of your qualified hurricane distributions received in a year in income for that year and then repay any portion of the distributions during the allowable 3-year period, the amount repaid will reduce the amount included in income for the year of distribution. If the repayment is made after the due date (including extensions) for your return for the year of distribution, you will need to file a revised Form 8915 with an amended return. See Amending Form 8915, later.taxmap/pubs/p575-007.htm#en_us_publink10004578
Maria received a $15,000 qualified hurricane distribution on January 10, 2006, from a section 457(b) plan. She elected out of the 3-year ratable method for reporting distributions on Form 8915 and included the entire $15,000 in gross income for 2006. On December 31, 2008, she repays $15,000 to the plan. She must file an amended return for 2006 to reduce her gross income by the $15,000 repayment amount and a revised Form 8915 to report the repayment. taxmap/pubs/p575-007.htm#en_us_publink10004579
If you are reporting the distribution in income ratably over the 3-year period and you repay any portion of the distribution to an eligible retirement plan before filing your 2008 tax return by the due date (including extensions) for that return, the repayment will reduce the portion of the distribution that is included in income in 2008. After 2008, qualified hurricane distributions are no longer required to be included in income. If, during 2008 you repay more than is otherwise includible in income for that year, the excess may be carried back to reduce the amount included in income for that year.taxmap/pubs/p575-007.htm#en_us_publink10004580
John received a $90,000 qualified hurricane distribution from his pension plan on November 15, 2006. He did not elect to include the entire distribution in his 2006 income. Without any repayments, he had to include $30,000 of the distribution in income on his 2006 return and would include in income the same amount on his 2007 and 2008 returns. On November 8, 2008, John repays $45,000 to an eligible retirement plan. He makes no other repayments during the allowable 3-year period. John may report the distribution and repayment in either of the following ways.
- Report $0 in income on his 2008 return, file an amended return for 2006 to carry the excess repayment of $15,000 ($45,000 - $30,000) back to reduce the amount previously included in income to $15,000 ($30,000 - $15,000), or
- Report $0 in income on his 2008 return, file an amended return for 2007 to carry the excess repayment of $15,000 ($45,000 - $30,000) back to reduce the amount previously included in income to $15,000 ($30,000 - $15,000).
If, after filing your original return, you make a repayment, the repayment may reduce the amount of your qualified hurricane distributions that were previously included in income. Depending on when a repayment is made, you may need to file an amended tax return to refigure your taxable income.
If you make a repayment by the due date of your original return (including extensions), include the repayment on your amended 2008 Form 8915.
If you make a repayment after the due date of your original return (including extensions), include the repayment on your 2009 Form 8915. However, you may file an amended return for 2006, 2007, or 2008 if either of the following applies.
- You elected to include all of your qualified hurricane distributions in income for 2006 (not over 3 years) on your original return.
- You received a qualified hurricane distribution in 2006 and included it in income over 3 years. You can amend your 2006, 2007, or 2008 return, if applicable, to carry the repayment back.
File Form 1040X to amend a return you have already filed. Generally, Form 1040X must be filed within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever is later.