The IRS has released Announcement 2017-15 detailing more relief available for those affected by Hurricane Maria and the California wildfires. This relief is in addition to previous disaster-related announcements, as well as relief provided by the Disaster Tax Relief and Airport and Airway Extension Act of 2017, which only applies to those affected by Hurricanes Harvey, Irma, and Maria. The announcement contains the following relief.
- Hardship distributions and plan loans are allowed for plans that do not yet allow for them, provided the document is amended no later than the end of the first plan year beginning after December 31, 2017, and provided the hardship or loan is taken no later than March 15, 2018.
- No six-month suspension of deferral contributions is required for hardships distributions taken under this guidance.
- Procedural requirements for hardship distributions and loans (e.g., spousal consent) taken under this guidance need not be flawlessly followed if the plan administrator makes a “good-faith diligent effort” to comply with the requirements and the plan administrator assembles any forgone documentation as soon as practicable.
- 457(b) governmental plans can treat a hardship distribution arising from disasters covered under this guidance as an unforeseeable emergency.
Distributions taken under this relief will be includable in gross income and will remain subject to the 10 percent early distribution penalty tax under 72(t).
The relief applies to employees who principal residence or place of employment is located in one of the disaster areas (U.S. Virgin Islands, Puerto Rico, and California). It also applies to employees whose lineal ascendant or descendant, dependent, or spouse has a principal residence or place of employment located in one of the disaster areas.