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taxmap/pubs/p590-024.htm#en_us_publink1000231142

Chapter 4
Disaster-Related Relief(p72)

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Hurricane-Related Relief(p72)


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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. Qualified hurricane distributions cannot be made after December 31, 2006, and they cannot be repaid after December 31, 2009.
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, below.
The 2009 Form 8915, Qualified Hurricane Retirement Plan Distributions and Repayments, is used to report 2009 repayments of 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.
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Qualified Hurricane Distributions(p72)


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Qualified Hurricane Distributions

A qualified hurricane distribution is any distribution you received in 2005 or 2006 from an eligible retirement plan (including IRAs) if both of the following conditions apply.
  1. Your main home was located in a qualified hurricane disaster area listed below on the date shown for that area.
    1. 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.
    2. September 23, 2005, for the Hurricane Rita disaster area. For this purpose, the Hurricane Rita disaster area includes the states of Louisiana and Texas.
    3. October 23, 2005, for the Hurricane Wilma disaster area. For this purpose, the Hurricane Wilma disaster area includes the state of Florida.
  2. 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 (1) 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 (1) and (2) applied, 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.
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Distribution limit.(p72)


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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.
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Main home.(p72)


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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.
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Eligible retirement plan.(p72)


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An eligible retirement plan can be any of the following.
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Additional 10% tax.(p72)


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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.
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Repayment of Qualified Hurricane Distributions(p72)


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EIC
2009 is the last year you can repay qualified hurricane distributions.
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.
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Repayment of distributions if reporting under the 1-year election.(p73)


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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, later.
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Repayment of distributions if reporting under the 3-year method.(p73)


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If you reported the distribution in income ratably over the 3-year period and you repay any portion of the distribution to an eligible retirement plan, the repayment may be carried back to reduce the amount included in income in previous years. After 2008, qualified hurricane distributions are no longer required to be included in income.
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Example.(p73)

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. He included $30,000 of the distribution in income on his 2006, 2007, and 2008 returns. On November 8, 2009, John repays $45,000 to an eligible retirement plan. He makes no other repayments during the allowable 3-year period. John may carry back the repayment and reduce the amount previously included in income by amending his 2006, 2007, or 2008 return.
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Repayment of qualified hurricane distribution to a Roth IRA.(p73)


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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.
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Example.(p73)
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In 2006, Ned took a $30,000 qualified hurricane distribution from a Roth IRA. The $30,000 was the total value of the Roth IRA. He had $20,000 in basis (contributions) and $10,000 represents earnings. He elected to include the entire distribution in income for 2006. On his 2006 return, he reported the distribution on Form 8606 and Form 8915 and determined that the taxable portion of the distribution was $10,000 ($30,000 - $20,000).
In 2009, Ned made a $15,000 repayment of the 2006 qualified hurricane distribution to his Roth IRA. He filed an amended return for 2006 for the $10,000 taxable portion of the distribution that was included in income. $5,000 of the $15,000 repayment represents basis in his Roth IRA for future distributions. $10,000 will be included in income when distributed in the future.
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Amending Your Return(p73)


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If you made a repayment in 2009, the repayment may reduce the amount of your qualified hurricane distributions that were previously included in income. You will need to file an amended tax return to refigure your taxable income.
Include the repayment on your 2009 Form 8915. You can file an amended return for 2006, 2007, or 2008 if either of the following applies.
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.