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previous page Previous Page: Publication 575 - Pension and Annuity Income - Hurricane-Related Relief
next page Next Page: Publication 575 - Pension and Annuity Income - Relief for Midwestern Disaster Areas
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p575-008.htm#en_us_publink1000116269

Relief for Kansas Disaster Area(p36)


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Relief for Kansas Disaster Area

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 May 4, 2007, Kansas storms and tornadoes.
taxmap/pubs/p575-008.htm#en_us_publink1000116270

Qualified Recovery Assistance Distribution(p36)


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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 (see Eligible retirement plan on page 35) 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. For a definition of main home, see Publication 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes.
  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/p575-008.htm#en_us_publink1000116313

Taxation of Qualified Recovery Assistance Distributions(p36)


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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, later.
taxmap/pubs/p575-008.htm#en_us_publink1000116314

Repayment of Qualified Recovery Assistance Distributions(p36)


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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/p575-008.htm#en_us_publink1000116276

Exceptions.(p36)


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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/p575-008.htm#en_us_publink1000116315

How To Report Qualified Recovery Assistance Distributions(p37)


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

taxmap/pubs/p575-008.htm#en_us_publink1000116316

2007 Qualified Recovery Assistance Distributions.(p37)


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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. Detailed instructions for reporting these distributions on Form 8915 and Form 8606 are provided in Publication 4492-A.
taxmap/pubs/p575-008.htm#en_us_publink1000116317

2008 Qualified Recovery Assistance Distributions.(p37)


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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 earlier. 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 in Publication 4492-A for instructions on completing the forms for this purpose.
taxmap/pubs/p575-008.htm#en_us_publink1000116318

Repayment of Qualified Distributions for the Purchase or Construction of a Main Home(p37)


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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/p575-008.htm#en_us_publink1000116319

How to report.(p37)
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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. Instructions for modifying the form for this purpose are provided in Publication 4492-A.
taxmap/pubs/p575-008.htm#en_us_publink1000116320

Amended return.(p37)
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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.
taxmap/pubs/p575-008.htm#en_us_publink1000116321

Loans From Qualified Plans(p37)


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The following benefits are available to qualified individuals.
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Qualified individual.(p37)
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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:
taxmap/pubs/p575-008.htm#en_us_publink1000116323

Limits on plan loans.(p37)
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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/p575-008.htm#en_us_publink1000116324

One-year suspension of loan payments.(p37)
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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 575 - Pension and Annuity Income - Hurricane-Related Relief
next pageNext Page: Publication 575 - Pension and Annuity Income - Relief for Midwestern Disaster Areas
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication