Hurricane Related Legislation Allows Penalty Free IRA Distributions | Wolters Kluwer
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  • Hurricane Related Legislation Allows Penalty-Free IRA Distributions

    Karl Leslie

    by Karl Leslie, Principal Attorney, Wolters Kluwer

    Published October 03, 2017

    On September 29, 2017, the President signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017. The bill, HR 3823, is designed to provide relief to victims of Hurricanes Harvey, Irma, and Maria. HR 3823 is similar to previous disaster relief legislation in that it allows disaster victims younger than age 59½ to take qualified hurricane disbursements from an individual retirement account (IRA) without being assessed a 10 percent early distribution penalty tax. Qualified hurricane distributions for Hurricanes Harvey, Irma, and Maria must be made before January 1, 2019. Unless elected otherwise, distributions are included in gross income ratably over a three tax-year period. An IRA owner also has three years following the date of receiving a distribution to roll over or repay all or part of the distribution, in one or more contributions, without being subject to the one rollover per-year limitation or the 60-day requirement. Additionally, the bill permits re-contribution by February 28, 2018 of certain qualified distributions made by first-time homebuyers impacted by one the hurricanes.

    As a result of HR 3823, Wolters Kluwer has updated the Disaster Tax Relief section of its IRA disclosure statements to summarize the requirements of this disaster relief legislation. This updated language will be included in the changes being made for the recently issued IRA Form 5305 series updates along with the updates for the annual IRA cost-of-living adjustments.

    Ensure you’re using the most accurate IRA solutions, including documents, for 2018.

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