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IRS.gov Website
Publication 575
taxmap/pubs/p575-007.htm#en_us_publink100076639

Qualified 2017 Disaster Relief(p38)

rule
taxmap/pubs/p575-007.htm#en_us_publink100076640

Introduction(p38)

rule
New rules apply to withdrawals, repayments, and loans from certain retirement plans (including IRAs) for taxpayers who suffered an economic loss as a result of Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires.
The principles set forth in Notice 2005-92, 2005-51 I.R.B. 165, available at IRS.gov/irb/2005-51_IRB, which provides guidance on the tax-favored treatment of distributions and plan loans for victims of Hurricane Katrina, also generally apply to these new rules.
If you receive a qualified disaster distribution (defined later), it is taxable, but isn’t subject to the 10% additional tax on early distributions. The taxable amount is figured in the same manner as other distributions. However, the distribution is included in income ratably over 3 years unless you elect to report the entire amount in the year of distribution. Also, you can repay the distribution and not be taxed on the distribution. See Qualified 2017 Disaster Distributions, later.
If you received a distribution from an eligible retirement plan to purchase or construct a main home but didn’t purchase or construct a main home because of Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires, you may be able to repay the distribution and not pay income tax or the 10% additional tax on early distributions. See Repayment of Qualified Distributions for the Purchase or Construction of a Main Home.
Form 8915B, Qualified 2017 Disaster Retirement Plan Distributions and Repayments, is used to report qualified disaster distributions and repayments. Also report qualified distributions for home purchases and construction that were cancelled because of Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires, on Form 8915B.
For information on other tax provisions related to Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires, see Pub. 976.
taxmap/pubs/p575-007.htm#en_us_publink100076674

Qualified 2017 Disaster Distributions(p38)

rule
If you receive a qualified disaster distribution, you generally must include it in your income in equal amounts over 3 years. For example, if you received a $60,000 qualified disaster distribution in 2017, you should include $20,000 in your income in 2017, 2018, and 2019. However, you can elect to include the entire distribution in your income in the year it was received.
A qualified disaster distribution is any distribution you received from an eligible retirement plan if all of the following conditions apply.
  1. The distribution was made:
    1. After August 22, 2017, and before January 1, 2019, for Hurricane Harvey or Tropical Storm Harvey.
    2. After September 3, 2017, and before January 1, 2019, for Hurricane Irma.
    3. After September 15, 2017, and before January 1, 2019, for Hurricane Maria.
    4. After October 7, 2017, and before January 1, 2019, for the California wildfire disasters.
  2. Your main home was located in a disaster area listed below on the date or any date in the period shown for that area.
    1. August 23, 2017, for the Hurricane Harvey disaster area. For this purpose, the Hurricane Harvey disaster area includes the states of Texas and Louisiana.
    2. September 4, 2017, for the Hurricane Irma disaster area. For this purpose, the Hurricane Irma disaster area includes the U.S. Virgin Islands, Puerto Rico, and the states of Georgia, Florida, and South Carolina.
    3. September 16, 2017, for the Hurricane Maria disaster area. For this purpose, the Hurricane Maria disaster area includes Puerto Rico and the U.S. Virgin Islands.
    4. October 8, 2017, to December 31, 2017, for the California wildfire disaster area. For this purpose, the California wildfire disaster area includes the state of California.
  3. You sustained an economic loss because of Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires.
If (1) through (3) above apply, you can generally designate any distribution (including a periodic payment or a required minimum distribution) from an eligible retirement plan as a qualified disaster distribution, regardless of whether the distribution was made on account of Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires. Qualified 2017 disaster distributions are permitted without regard to your need or the actual amount of your economic loss, described later.
taxmap/pubs/p575-007.htm#en_us_publink100076655

Distribution limit.(p39)

rule
The total of your qualified disaster distributions from all plans is limited to $100,000 for Hurricane Harvey, Tropical Storm Harvey, Hurricane Irma or Hurricane Maria, and $100,000 for the California wildfires. If you take distributions from more than one type of plan, such as a 401(k) plan and an IRA, and the total amount of your distributions exceeds $100,000 for either category, you may allocate the $100,000 limit among the plans by any reasonable method you choose.
A reduction or offset (after August 22, 2017, for Hurricane Harvey or Tropical Storm Harvey; after September 3, 2017, for Hurricane Irma; after September 15, 2017, for Hurricane Maria; or after October 7, 2017, for California wildfires) of your account balance in an eligible retirement plan in order to repay a plan loan can also be designated as a qualified disaster distribution.
taxmap/pubs/p575-007.htm#en_us_publink100076656

Example.(p39)

In 2017, you received a distribution of $50,000. In 2018, you receive a distribution of $125,000. Both distributions meet the requirements for a qualified disaster distribution. If you decide to treat the entire $50,000 received in 2017 as a qualified disaster distribution, only $50,000 of the 2018 distribution can be treated as a qualified disaster distribution.
taxmap/pubs/p575-007.htm#en_us_publink100079302

Economic loss.(p39)

rule
Qualified disaster distributions are permitted without regard to your need or the actual amount of your economic loss. Examples of an economic loss include, but aren’t limited to:
  1. Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause;
  2. Loss related to displacement from your home; or
  3. Loss of livelihood due to temporary or permanent layoffs.
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Eligible retirement plan.(p39)

rule
An eligible retirement plan can be any of the following.
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Main home.(p39)

rule
Generally, your main home is the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, won’t change your main home.
taxmap/pubs/p575-007.htm#en_us_publink100079303

Taxation of Qualified Disaster Distributions(p39)

rule
Qualified disaster distributions are included in income in equal amounts over 3 years. However, if you elect, you can include the entire distribution in your income in the year it was received.
Qualified disaster distributions aren’t subject to the 10% additional tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). Also, if you are receiving substantially equal periodic payments from a qualified retirement plan, the receipt of a qualified disaster distribution from that plan will not be treated as a change in those substantially equal payments merely because of the qualified disaster distribution. However, any distributions you received in excess of the $100,000 qualified disaster distribution limit may be subject to the additional tax on early distributions.
taxmap/pubs/p575-007.htm#en_us_publink100076675

Repayment of Qualified Disaster Distributions(p39)

rule
If you choose, you generally can repay any portion of a qualified disaster distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. Also, you can repay a qualified disaster distribution made on account of a hardship from a retirement plan. However, see Exceptions below for qualified disaster distributions you cannot repay.
You have 3 years from the day after the date you received the distribution to make a repayment. Amounts that are repaid are treated as a trustee-to-trustee transfer and are not included in income. Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a rollover. See Form 8915B, for more information on how to report repayments.
taxmap/pubs/p575-007.htm#en_us_publink100076661
Exceptions.(p40)
You cannot repay the following types of distributions.
  1. Qualified disaster distributions received as a beneficiary (other than as a surviving spouse).
  2. Required minimum distributions.
  3. Periodic payments (other than from an IRA) that are for:
    1. A period of 10 years or more,
    2. Your life or life expectancy, or
    3. The joint lives or joint life expectancies of you and your beneficiary.
taxmap/pubs/p575-007.htm#en_us_publink100076662

Repayment of distributions if reporting under the 1-year election.(p40)

rule
If you elect to include all of your qualified disaster distributions received in a year in income for that year and then repay any portion of the distributions during the allowable 3-year period, the amount repaid will reduce the amount included in income for the year of distribution. If the repayment is made after the due date (including extensions) for your return for the year of distribution, you will need to file a revised Form 8915B with an amended return. See Amending Your Return, later.
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Example.(p40)

Maria received a $45,000 qualified disaster distribution on November 1, 2017. After receiving reimbursement from her insurance company for a casualty loss, Maria repays $45,000 to an IRA on March 31, 2018. She reports the distribution and the repayment on Form 8915B, which she files with her timely filed 2017 tax return. As a result, no portion of the distribution is included in income on her return.
taxmap/pubs/p575-007.htm#en_us_publink100076665

Repayment of distributions if reporting under the 3-year method.(p40)

rule
If you are reporting the qualified disaster distribution in income over a 3-year period and you repay any portion of the qualified disaster distribution to an eligible retirement plan before filing your 2017 tax return, the repayment will reduce the portion of the distribution that is included in income in 2017. If you repay a portion after the due date (including extensions) for filing your 2017 return, the repayment will reduce the portion of the distribution that is included in income in 2018. If you repay a portion after the due date (including extensions) for filing your 2018 return, the repayment will reduce the portion of your distribution that is includible on your 2019 return. If, during a year in the 3-year period, you repay more than is otherwise includible in income for that year, the excess may be carried forward or (after 2017) back to reduce the amount included in income for that year.
taxmap/pubs/p575-007.htm#en_us_publink100076666

Example.(p40)

John received a $90,000 qualified disaster distribution from his pension plan on November 15, 2017. He doesn’t elect to include the entire distribution in his 2017 income. Without any repayments, he would include $30,000 of the distribution in income on each of his 2017, 2018, and 2019 returns. On November 10, 2018, John repays $45,000 to an IRA. He makes no other repayments during the allowable 3-year period. John may report the distribution and repayment in either of the following ways.
taxmap/pubs/p575-007.htm#en_us_publink100076676

Amending Your Return(p40)

rule
If, after filing your original return, you make a repayment, the repayment may reduce the amount of your qualified disaster distributions that were previously included in income. Depending on when a repayment is made, you may need to file an amended tax return to refigure your taxable income.
If you make a repayment by the due date of your original return (including extensions), include the repayment on your amended return.
If you make a repayment after the due date of your original return (including extensions), include it on your amended return only if either of the following apply.
taxmap/pubs/p575-007.htm#en_us_publink100076668

Example.(p40)

You received a qualified disaster distribution in the amount of $90,000 on October 15, 2017. You choose to spread the $90,000 over 3 years ($30,000 in income for 2017, 2018, and 2019). On November 19, 2018, you make a repayment of $45,000. For 2018, none of the qualified disaster distribution is includible in income. The excess repayment of $15,000 can be carried back to 2017. Also, rather than carrying the excess repayment back to 2017, you can carry it forward to 2019.
File Form 1040X to amend a return you have already filed. Generally, Form 1040X must be filed within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever is later.
taxmap/pubs/p575-007.htm#en_us_publink100076677

Repayment of Qualified Distributions for the Purchase or Construction of a Main Home(p40)

rule
If you received a qualified distribution to purchase or construct a main home in a Hurricane Harvey, Hurricane Irma, or Hurricane Maria disaster area, you can repay all or any part of that distribution to an eligible retirement plan during the period beginning on August 23, 2017, and ending on February 28, 2018. If you received a qualified distribution to purchase or construct a main home in the California wildfire disaster area, you can repay all or any part of that distribution to an eligible retirement plan during the period beginning on October 8, 2017, and ending on June 30, 2018.
To be a qualified distribution, the distribution must meet all of the following requirements.
Any amount that is repaid before March 1, 2018 (or July 1, 2018, if in the California wildfire disaster area), is treated as a trustee-to-trustee transfer and is not included in income. Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a rollover.
A qualified distribution not repaid before March 1, 2018 (or July 1, 2018, if in the California wildfire disaster area), may be taxable for 2017 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions.
You must file Form 8915B if you received a qualified distribution that you repaid, in whole or in part, before March 1, 2018 (or July 1, 2018, if in the California wildfire disaster area).
taxmap/pubs/p575-007.htm#en_us_publink100076678

Loans From Qualified Plans(p41)

rule
As described further, below, the following special rules are available to qualified individuals.
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Qualified individual.(p41)

rule
You are a qualified individual if any of the following apply. Examples of an economic loss include, but are not limited to:
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Limits on plan loans.(p41)

rule
The general $50,000 limit on plan loans may be increased to $100,000 by the plan administrator. In addition, the general loan limit based on 50% of your vested accrued benefit may be increased to 100% of that benefit. The higher limits apply only to loans made during the period beginning on September 29, 2017 (or February 9, 2018, if in the California wildfire disaster area), and ending on December 31, 2018.
taxmap/pubs/p575-007.htm#en_us_publink100076671

One-year suspension of plan loan payments.(p41)

rule
Payments on plan loans due during the period beginning on the qualified beginning date and ending on December 31, 2018, may be suspended for 1 year (suspension period) by the plan administrator. The qualified beginning date is: If you are a qualified individual based on more than one disaster, use the suspension period with the earliest beginning date.
taxmap/pubs/p575-007.htm#en_us_publink100079305

Information for Eligible Retirement Plans(p41)

rule
A plan administrator may choose whether to treat a distribution as a qualified 2017 disaster distribution or whether to accept a rollover of a qualified disaster distribution and may develop reasonable procedures for determining whether distributions are qualified disaster distributions. However, the treatment of qualified disaster distributions must be consistent under each plan. The payment of a qualified disaster distribution to an individual must be reported on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. This reporting is required even if the individual recontributes the qualified disaster distribution to the same plan in the same year. If a payer is treating the payment as a qualified disaster distribution and no other appropriate code applies, the payer is permitted to use distribution code 2 (early distribution, exception applies) in box 7 of Form 1099-R. However, a payer in this case is also permitted to use distribution code 1 (early distribution, no known exception) in box 7 of Form 1099-R.