IRS Issues Disaster Relief FAQs for Retirement Plans and IRAs under SECURE 2.0 Act

On May 19, 2024, the IRS issued FAQs regarding special rules for distributions from retirement plans, IRAs, and retirement plan loans for certain individuals impacted by federally declared major disasters. The SECURE 2.0 Act provided the framework for ongoing disaster relief for these distributions for affected individuals, and the FAQs are intended to provide information on disaster relief options that may be available. It is important to note that the FAQs are only intended to provide general guidance and cannot be relied upon by the IRS to resolve a case.

The FAQs are divided into four sections:

1. General information: These FAQs provide basic information to identify qualified individuals, to identify qualified disasters, and to provide a basic understanding of the expanded distribution rules which are optional for employers.
2. Taxation and reporting of qualified disaster recovery distributions: These FAQs provide details including information on the application of income tax and how both qualified individuals and plans should report the distributions.
3. Repayments of qualified distributions for purchasing or constructing a principal residence in a qualified disaster area: These FAQs describe the criteria for purchasing or constructing a principal residence in a qualified disaster area and provide details on repayment options.
4. Loans from certain qualified plans: This FAQ clarifies both the allowable loan repayment delay and the increased loan limits under the SECURE 2.0 Act.

Employers who sponsor retirement plans should be aware of the new guidance and work with service providers as needed if they allow these special distributions.

IRS Disaster Relief FAQs »