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IRS.gov Website
Publication 590-B
taxmap/pubs/p590b-009.htm#disaster-relatedreliefdisaster-rela-53f89ba2

Chapter 3
Disaster-Related Relief(p37)


taxmap/pubs/p590b-009.htm#en_us_publink100073837Introduction

New rules provide for tax-favored withdrawals and repayments from certain retirement plans (including IRAs) for taxpayers who suffered an economic loss as a result of Hurricane Harvey, Irma, or Maria.
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 for victims of Hurricane Katrina, also generally apply to these new rules.
If you received 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 IRA 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 Disaster Distributions, later.
If you received a qualified distribution from an IRA to buy, build, or rebuild a first home but didn’t buy, build, or rebuild the home because of Hurricane Harvey, Irma, or Maria, you may be able to repay the distribution and not pay income tax or the 10% additional tax on early distributions. See Repayment of a Qualified Distribution 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, Irma, or Maria on Form 8915B.
For information on other tax provisions related to these hurricanes and other certain qualified disaster distributions, see Pub. 976.
taxmap/pubs/p590b-009.htm#en_us_publink100073838

Qualified Disaster Distributions(p37)

rule
A qualified disaster distribution is any distribution you received from an eligible retirement plan (including IRAs) 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.
    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.
  2. Your main home was located in a qualified disaster area listed below on the date shown for that area.
    1. August 23, 2017, for the Hurricane Harvey disaster area. For this purpose, the Hurricane Harvey disaster area includes the state of Texas.
    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 and Florida.
    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.
  3. You sustained an economic loss because of Hurricane Harvey, Irma, or Maria. 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.
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, Irma, or Maria. Qualified disaster distributions are permitted without regard to your need or the actual amount of your economic loss.
taxmap/pubs/p590b-009.htm#en_us_publink100073839

Distribution limit.(p37)

rule
The total of your qualified disaster distributions from all plans is limited to $100,000. If you have distributions from more than one type of plan, such as a 401(k) plan and an IRA, and the total exceeds $100,000, you may allocate the $100,000 limit among the plans by any reasonable method.
taxmap/pubs/p590b-009.htm#en_us_publink100073840

Example.(p37)

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 could be treated as a qualified disaster distribution.
taxmap/pubs/p590b-009.htm#en_us_publink100073841

Main home.(p37)

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/p590b-009.htm#en_us_publink100073842

Eligible retirement plan.(p38)

rule
An eligible retirement plan can be any of the following.
taxmap/pubs/p590b-009.htm#en_us_publink100073843

Taxation of qualified disaster distributions.(p38)

rule
Qualified disaster distributions are included in 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, if you elect, you can include the entire qualified disaster 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/p590b-009.htm#en_us_publink100073844

Repayment of Qualified Disaster Distributions(p38)

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 for qualified disaster distributions you cannot repay.
You have 3 years from the day after the date you received the qualified disaster 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/p590b-009.htm#en_us_publink100076097
Exceptions.(p38)
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/p590b-009.htm#en_us_publink100073845

Repayment of qualified disaster distributions if reporting under the 1-year election.(p38)

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.
taxmap/pubs/p590b-009.htm#en_us_publink100073846

Example.(p38)

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/p590b-009.htm#en_us_publink100073847

Repayment of qualified disaster distributions if reporting under the 3-year method.(p38)

rule
If you are reporting the distribution in income over the 3-year period and you repay any portion of the 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/p590b-009.htm#en_us_publink100073848

Example.(p38)

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/p590b-009.htm#en_us_publink100073850

Amending Your Return(p39)

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/p590b-009.htm#en_us_publink100073851

Example.(p39)

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 carry 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/p590b-009.htm#en_us_publink100073852

Repayment of a Qualified Distribution for the Purchase or Construction of a Main Home(p39)

rule
If you received a qualified distribution to purchase or construct a main home in a Hurricane Harvey, Irma, or 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.
To be a qualified distribution, the distribution must meet all of the following requirements.
  1. The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA.
  2. The distribution was received after February 28, 2017, and before September 21, 2017.
  3. The distribution was to be used to purchase or construct a main home in the Hurricane Harvey, Irma, or Maria disaster area that was not purchased or constructed because of Hurricane Harvey, Irma, or Maria.
Any amount that is repaid before March 1, 2018, 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, 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.