CHA News Article

Funds Available From Retirement Plans for Those Affected By Wildfires

The Internal Revenue Service (IRS) is allowing employees affected by the recent Northern California wildfires to take loans or distributions from retirement plans to alleviate hardships caused by the wildfires. IRS Announcement 2017-15 permits participants in qualified employer retirement plans — 401(k), 403(b), and 457(b) plans and, in some circumstances, traditional pension plans — to take a loan or a hardship distribution for a need arising from the wildfires using a streamlined approach. This approach permits plan administrators to disregard verification procedures for hardship distributions and to disregard certain procedural requirements for loans. Loans and hardship distributions under this streamlined approach must be made between Oct. 8, 2017, and March 15, 2018. The usual tax consequences of such actions still apply; hardship distributions are includible in the employee’s gross income and generally subject to the 10 percent early distribution tax, while loans are not includible in the employee’s gross income, but are subject to repayment.