The measure “specifically helps hurricane victims keep
more of their paycheck, deduct more of the cost of their
expensive property damage, and have more affordable
and immediate access to money they have saved for
their retirement,” Ways and Means Chairman Kevin Brady
(R-Texas) said in a news release. “The legislation will also
encourage even more Americans to donate generously to
help those in need.”
ACCESS TO RETIREMENT FUNDS
The bill waives the 10 percent penalty on early distribu-
tions from retirement accounts for taxpayers in affected
areas.
Individuals are eligible to make the withdrawal if their pri-
mary residence was in one of the disaster areas as of the
date of the storm and they sustained an economic loss.
The withdrawn amount would be included in the taxpay-
er’s gross income, and would be spread over three years
unless the taxpayer opted to claim it in a single year. If
the taxpayer repaid the distribution within three years, it
would be considered a rollover for tax purposes and they
could claim a refund for their previous income tax pay-
ments.
The withdrawal must occur by Jan. 1, 2019, and wouldn’t
be subject to withholding.
An individual could withdraw as much as $100,000 as hur-
ricane distributions over their lifetime.
Plan sponsors wouldn’t be in violation of the Internal Rev-
enue Service’s retirement plan rules unless they distribut-
ed more than $100,000 to an individual.
Individuals could return withdrawals they had made for a
home purchase in a disaster area between Feb. 28 and
Sept. 21 if the home wasn’t purchased or constructed be-
cause of the hurricanes.
RETIREMENT PLAN LOANS
The bill would increase the
size of a loan an individual
can take from their employ-
er retirement fund. Loans
could be for as much as
$100,000 -- less other out-
standing loans -- or half the
present value of the vested
balance of the plan.
The bill delays repayment
deadlines for individuals
with outstanding loans as of
the date of the disaster. The
repayment date for loans
due on or before Dec. 31,
2018, would be delayed for
one year. Individuals who
took out loans after the hur-
ricanes wouldn’t receive the
extension.
EMPLOYMENT CREDIT
The bill creates a credit for
businesses that were ren-
dered inoperable by the
hurricanes but that retained
their employees.
Employers could receive
a credit for 40 percent of
each employee’s wages.
The credit amount couldn’t
exceed $6,000 per employ-
ee. The employee’s prin-
cipal place of employment
would have to be in one of
the disaster zones.
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