Special rules applied to withdrawals from and repayments to certain retirement plans (including IRAs) for taxpayers who suffered an economic loss as a result of Hurricane Katrina, Rita, or Wilma. While qualified hurricane distributions cannot be made after December 31, 2006, the special rules still apply to repayments of these distributions.
If you received a qualified hurricane distribution, it is taxable, but is not subject to the 10% additional tax on early distributions. The taxable amount is figured in the same manner as other IRA distributions. However, the distribution is included in income ratably over 3 years 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
Form 8915, Qualified Hurricane Retirement Plan Distributions and Repayments, is used to report qualified hurricane distributions and repayments.
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/p590-024.htm#en_us_publink1000136400
A qualified hurricane distribution is any distribution you received in 2005 or 2006 from an eligible retirement plan (including IRAs) if all of the following conditions apply.
- 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 includes 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 includes the states of Louisiana and Texas.
- October 23, 2005, for the Hurricane Wilma disaster area. For this purpose, the Hurricane Wilma disaster area includes 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 include, but are 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 generally could 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.taxmap/pubs/p590-024.htm#en_us_publink1000136401
The total of your qualified hurricane distributions from all plans for 2005 and 2006 was limited to $100,000. If you had distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you could have allocated the $100,000 limit among the plans, any way you chose.taxmap/pubs/p590-024.htm#en_us_publink1000136402
In 2005, you received a distribution of $50,000. In 2006, you received a distribution of $125,000. Both distributions met the requirements for a qualified hurricane distribution. If you decided to treat the entire $50,000 received in 2005 as a qualified hurricane distribution, only $50,000 of the 2006 distribution could have been treated as a qualified hurricane distribution.taxmap/pubs/p590-024.htm#en_us_publink1000136403
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/p590-024.htm#en_us_publink1000136404
An eligible retirement plan can be 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.
Qualified hurricane distributions are not subject to the 10% additional tax (including the 25% additional tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). However, any distributions you received in excess of the $100,000 qualified hurricane distribution limit may have been subject to the additional tax on early distributions.taxmap/pubs/p590-024.htm#en_us_publink1000136406
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 method, or you elected to report the distributions in the year of distribution.taxmap/pubs/p590-024.htm#en_us_publink1000136407
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 Your Return
If you are reporting the distribution in income 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 was 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 2008, the excess may be carried back to reduce the amount included in income for that year.taxmap/pubs/p590-024.htm#en_us_publink1000136410
John received a $90,000 qualified hurricane distribution from his pension plan on November 15, 2006. He does not elect to include the entire distribution in his 2006 income. Without any repayments, he would include $30,000 of the distribution in income on each of his 2006, 2007, and 2008 returns. On November 10, 2008, John repays $45,000 to an IRA. 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, and 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, and 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 you make a repayment of a qualified hurricane distribution to a Roth IRA, the repayment is first considered to be a repayment of earnings. Any repayment of a qualified hurricane distribution in excess of earnings will increase your basis in the Roth IRA by the amount of the repayment in excess of earnings.taxmap/pubs/p590-024.htm#en_us_publink1000136412
In 2005, Ned takes a $30,000 qualified hurricane distribution from a Roth IRA. The $30,000 is the total value of the Roth IRA. He has $20,000 in basis (contributions) and $10,000 represents earnings. He elects to include the entire distribution in income for 2005. In 2005, he reports the distribution on Form 8606 and Form 8915 and determines that the taxable portion of the distribution is $10,000 ($30,000 - $20,000).
In 2008, Ned makes a $15,000 repayment of the 2005 qualified hurricane distribution to his Roth IRA. He will file an amended return for 2005 for the $10,000 taxable portion of the distribution that was included in income. $5,000 of the $15,000 repayment will represent basis in his Roth IRA for future distributions. $10,000 will be included in income when distributed in the future.taxmap/pubs/p590-024.htm#en_us_publink1000136413
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 return.
If you make a repayment after the due date of your original return (including extensions), include it on your amended return only if either of the following apply.
- 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.
You received a qualified hurricane distribution in the amount of $90,000 on October 15, 2006. You choose to spread the $90,000 over 3 years ($30,000 in income for 2006, 2007, and 2008). On November 19, 2008, you make a repayment of $45,000. For 2008, none of the qualified hurricane distribution is includible in income. The excess repayment of $15,000 can be carried back to 2006 or 2007.
File Form 1040X, Amended U.S. Individual Income Tax Return, 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.