October 31, 2005 – A bill introduced last week in the House of Representatives would extend to certain Hurricane Rita victims the ability to receive distributions from retirement arrangements without having to pay an early distribution penalty tax. The legislation is primarily intended to provide incentives for reconstruction activity, including tax-favored opportunity zone bonds.
However, a provision in this bill (which has not yet been assigned an H.R. bill number) would give qualifying Hurricane Rita victims the same penalty-free distribution opportunities that the Katrina Emergency Tax Relief Act of 2005 has provided to Hurricane Katrina victims. This bill may be considered by the full House during the week of October 31. Sources indicate a Senate bill with similar provisions may also soon be introduced.