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taxmap/pubs/p4492b-005.htm#en_us_publink1000135465

IRAs and Other Retirement Plans(p6)


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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 taxpayers who suffered economic losses as a result of the severe storms, tornadoes, or flooding.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135466

Definitions(p6)


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taxmap/pubs/p4492b-005.htm#en_us_publink1000135467

Qualified disaster recovery assistance distribution.(p6)


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A qualified disaster recovery assistance distribution is any distribution you received from an eligible retirement plan if all of the following apply.
  1. The distribution was made on or after the applicable disaster date and before January 1, 2010.
  2. Your main home was located in a Midwestern disaster area on the applicable disaster date.
  3. You sustained an economic loss because of the severe storms, tornadoes, or flooding and your main home was in a Midwestern disaster area on the applicable disaster date. 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 disaster recovery assistance distribution, regardless of whether the distribution was made on account of the severe storms, tornadoes, or flooding. Qualified disaster recovery assistance distributions are permitted without regard to your need or the actual amount of your economic loss.
The total of your qualified disaster 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 can allocate the $100,000 limit among the plans any way you choose.
A reduction or offset (on or after the applicable disaster date) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified disaster recovery assistance distribution.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135468

Eligible retirement plan.(p6)


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An eligible retirement plan can be any of the following.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135469

Main home.(p6)


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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/p4492b-005.htm#en_us_publink1000135470

Taxation of Qualified Disaster Recovery Assistance Distributions(p6)


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previous topic occurrence Taxation of Qualified Disaster Recovery Assistance Distributions next topic occurrence

This benefit applies to the counties in both Tables 1 and 2.
 
Qualified disaster 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 disaster 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 disaster recovery assistance distribution limit may be subject to the additional tax on early distributions.
For more information, see Form 8930.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135471

Repayment of Qualified Disaster Recovery Assistance Distributions(p6)


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previous topic occurrence Repayment of Qualified Disaster Recovery Assistance Distributions next topic occurrence

This benefit applies to the counties in both Tables 1 and 2.
 
If you choose, you generally can repay any portion of a qualified disaster recovery assistance distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. Also, you can repay a qualified disaster recovery assistance distribution made on account of a hardship from a retirement plan. However, see Exceptions later for qualified disaster 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, a repayment of a qualified disaster recovery assistance distribution to an IRA is not counted when figuring the one-rollover-per-year limitation. See Form 8930 for more information on how to report repayments.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135472

Exceptions.(p7)


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You cannot repay the following types of distributions.
  1. Qualified disaster 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/p4492b-005.htm#en_us_publink1000135473

Repayment of Qualified Distributions for the Purchase or Construction of a Main Home(p7)


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previous topic occurrence Repayment of Qualified Distributions for the Purchase or Construction of a Main Home next topic occurrence

This benefit applies to the counties in both Tables 1 and 2.
 
If you received a qualified distribution to purchase or construct a main home in a Midwestern disaster area, you can repay part or all of that distribution on or after the applicable disaster date, but no later than March 3, 2009, 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 the date that was 6 months before the day after the applicable disaster date.
  3. The distribution was to be used to purchase or construct a main home in a Midwestern disaster area that was not purchased or constructed because of the severe storms, tornadoes, or flooding.
Amounts that are repaid before March 4, 2009, are treated as a qualified rollover and are not included in income. Also, a repayment of a qualified distribution to an IRA is not counted when figuring the one-rollover-per-year limitation.
A qualified distribution not repaid before March 4, 2009, may be taxable for 2007 or 2008 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions.
You must file Form 8930 if you received a qualified distribution that you repaid, in whole or in part, before March 4, 2009.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135474

Loans From Qualified Plans(p7)


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previous topic occurrence Loans From Qualified Plans next topic occurrence

This benefit applies to the counties in both Tables 1 and 2.
 
The following benefits are available to qualified individuals.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135475

Qualified individual.(p7)


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You are a qualified individual if your main home was located in a Midwestern disaster area on the applicable disaster date and you had an economic loss because of the severe storms, tornadoes, or flooding. Examples of an economic loss include, but are not limited to:
taxmap/pubs/p4492b-005.htm#en_us_publink1000135476

Limits on plan loans.(p7)


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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 main home was located in a Midwestern disaster area, the higher limits apply only to loans received during the period beginning on October 3, 2008, and ending on December 31, 2009.
taxmap/pubs/p4492b-005.htm#en_us_publink1000135477

One-year suspension of loan payments.(p7)


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Payments on plan loans outstanding on or after the applicable disaster date, 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 the applicable disaster date and ending on December 31, 2009.