In a recent press release by the IRS, the service announced exceptions to certain tax rules regarding loans and hardship distributions from retirement plans. If you live in a disaster area or have family or other dependents that live in a disaster area affected by Hurricane Sandy, then you are eligible to take loans or hardship distributions to help the relief process. 401(k) plan participants, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, and state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of streamlined loan procedures and liberalized hardship distribution rules. IRA participants are still barred from taking out loans, but they may be eligible to receive distributions under the relaxed procedures. These types of loans and hardship distributions will also be allowed before the plan is formally amended to provide for such features. The goal of the service is to relax some of the administrative procedures that apply to retirement plan loans and hardship distributions to speed up the process and get money to disaster victims. For more information on this announcement, please contact our office.
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