Special Loans For Katrina Victims To Purchase Home !!TOP!!
On September 23, 2005, President Bush signed the Katrina Emergency Tax Relief Act of 2005 (KETRA) (P.L. 109-73) into law. Besides providing $6.1 billion in temporary tax relief for residents in Louisiana, Mississippi and Alabama who were affected by the hurricane in late August, among its other relief provisions, KETRA modifies existing rules governing retirement plan withdrawals and loans, in order to free up additional funds for Hurricane Katrina victims.
special loans for katrina victims to purchase home
Recontributions of withdrawals for home purchases cancelled due to Katrina. A distribution received by an individual from a 401(k) plan, a 403(b) annuity, or an IRA in order to buy a home in the Hurricane Katrina disaster area may be recontributed to the plan, annuity, or IRA in certain circumstances. This KETRA provision applies to an individual who receives a qualified distribution --a hardship distribution from a 401(k) plan or 403(b) annuity, or a qualified first-time homebuyer distribution from an IRA (1) that is received after February 28, 2005 and before August 29, 2005 and (2) that was used to buy or construct a principal residence in the Hurricane Katrina disaster area that could not be purchased or constructed because of Hurricane Katrina.
Increased plan loan limits. The dollar limitations on loans from qualified employer plans are doubled for Hurricane Katrina victims. Under KETRA, plan loan limits are increased to the lesser of (1) $100,000 reduced by the excess of (a) the highest outstanding balance of all other loans to the participant from all plans maintained by the employer during the prior one-year period ending on the day before the loan is made over (b) the outstanding loan balance on the date the loan is made, or (2) the greater of $10,000 or the participant' accrued benefit under the plan. This provision is effective for loans made on or after September 23, 2005 and before January 1, 2007 and apply for qualified individuals whose principal place of abode on August 28, 2005 is located in the Hurricane Katrina disaster area and who has sustained an economic loss due to Katrina.
CCH Note: The IRS has separately made some changes to the hardship distribution and 401(k) plan loan rules for Hurricane Katrina victims. Under the IRS guidance, plans can make loans or distributions based on the employee's authorization, without waiting for the normal documentation required to justify the distribution. Further, the plan can make the loan or distribution even if its terms do not authorize the payment. Plan participants in another part of the country can take a loan or a hardship distribution to help family members living in the disaster area.
House and Senate pass compromise Hurricane Katrina tax relief measure. Both the House and the Senate on September 21, 2005 passed the Katrina Emergency Tax Relief Act of 2005 (HR 3768), a compromise agreement between Senate and House lawmakers that provides $6.1 billion in tax relief for residents in Louisiana, Mississippi and Alabama who were affected by the hurricane in late August. Among other relief provisions, the measure would modify existing rules governing qualified retirement plan withdrawals and loans, in order to free up additional funds for Hurricane Katrina victims.
Treasury, IRS announce special relief to encourage leave-donation programs for victims of Hurricane Katrina. Treasury Department and IRS officials have announced special relief intended to support leave-based donation programs to aid victims who have suffered from the extraordinary destruction caused by Hurricane Katrina. Under these programs, employees donate their vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of Hurricane Katrina.