Relief for Victims of Hurricane Matthew-IRS Announcement 2016-39

The IRS issued Announcement 2016-39, in which they provide relief to taxpayers who have been adversely affected by Hurricane Matthew and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by Hurricane Matthew.

The announcement also provides relief from certain verification procedures that may be required under retirement plans for loans and hardship distributions.

 

Waivers

  • An employer that sponsors a qualified plan, 403(b) plan or governmental 457(b) plan may allow participants to make withdrawals or loans, by waiving the following requirements:
  •  The restriction that permits elective deferrals to be distributed only in certain situations, one of which is on account of hardship.
  • The restriction that permits distributions from 457(b) plans only in certain situations upon the occurrence of certain enumerated events, one being when the participant is faced with an unforeseeable emergency.
  • The restriction that prohibits certain other types of plans ( example pension plans) or accounts ( such as accounts holding qualified nonelective contributions (“QNECs”) or qualified matching contributions (“QMACs”) )  from making in-service distributions (distributions to a participant who is still an employee) even if there is a hardship.
  • The restriction that requires a plan to contain language authorizing loans or distributions, in order to make a loan or distribution (including a hardship distribution),
  • The requirements, including the verification process that an employee must satisfy in order to be eligible for a hardship distribution.

 

The normal spousal consent rules continue to apply

See Announcement 2016-39  for details