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Kuzma Vladimirov
Kuzma Vladimirov

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.


Retirement plans permitted to make loans and hardship distributions to Hurricane Katrina victims. The IRS has announced that streamlined loan procedures and liberalized hardship distribution rules will apply to retirement plan loans and distributions made to Hurricane Katrina victims. (IRS Announcement 2005-70, IRB 2005-40, October 3, 2005.)


Introduced Tuesday, the bill offers tax relief to help hurricane victims rebuild their homes,restore their possessions, access housing, and find jobs. It also offers a series of charitable giving taxincentives to promote charitable aid for hurricane victims. The bill originated in the Committee onFinance from Sen. Chuck Grassley, chairman, and Sen. Max Baucus, ranking member. Original cosponsorsare Sens. Trent Lott and Thad Cochran of Mississippi, Mary Landrieu and David Vitter ofLouisiana, and Richard Shelby of Alabama.


Among the report's many findings is that four of every five New Orleans recipients in the Road Home Program, a $10.3 billion initiative launched by former Gov. Kathleen Blanco of Louisiana to help homeowners statewide rebuild their damaged and destroyed houses, did not get enough money to cover their repairs. The largest single housing-recovery program in U.S. history, the federally funded program allocates up to $150,000 to hurricane victims to rebuild their damaged homes. It also provides loans and incentive grants to property owners who operate affordable rental homes, and offers building professionals and contractors training and construction resources to assist Road Home applicants.


Before Hurricane Katrina, life was already difficult for La'Tina King, a single parent of five girls ages 9 to 5 -- all with special psychiatric needs now exacerbated by the Katrina ordeal. Since the storm destroyed the family's quaint three-bedroom rental house on the New Orleans West Bank, life has been stressful, frustrating, and overwhelming. Two of her children have been diagnosed with attention-deficit hyperactivity disorder. One daughter has oppositional-defiant disorder, which most often erupts in the form of violent panic attacks whenever it rains, no doubt a consequence of the family's nightmarish Katrina ordeal. Thanks to Medicaid, all of her children see a psychiatrist twice a month, and two take psychiatric drugs daily. King, 27, is on antidepressants and sees a psychiatrist when she can. Of all of her many burdens, however, she worries most about finding a permanent home.


Frank, from Philadelphia, PA writes: What will you do to help all of the victims of Hurrican Katrina? Carlos GutierrezThanks for the question, Frank. I know that's a question that everybody is asking given the scope and extent of the damage caused by both Hurricane Katrina and Rita. So far, President Bush has asked for, and Congress has approved, some $62 billion in disaster relief. Additional help is on the way, including tax relief and housing assistance. In addition, the President is proposing a number of initiatives to help rebuild the Gulf Coast. These include a Gulf Opportunity Zone that would give immediate tax incentives for job creation and tax relief and loan guarantees for small businesses, including minority-owned enterprises. He has also proposed Worker Recovery Accounts that would provide up to $5,000 that can be used for job training, education, and child-care expenses. And an Urban Homesteading Act that identifies federal property in the region that can be used to build homes for lower-income citizens. At the Commerce Department, I'm focused on working with businesses and state and local officials to get their economies going again. For example, today we announced a new Hurricane Contracting Information Center that will help small and medium-sized businesses bid on federal contracts. The center will be especially helpful for minority and small businesses that want to participate in the rebuilding effort. The center has a website (www.RebuildingTheGulfCoast.gov) and a toll-free number (1-888-4USADOC). dorinda, from old hickory, tn writes: I just wanted the President to know that he should not let the media and other naysayers bother him. I believe he did as much as he could have done with Katrina and with Rita under the circumstances. What some people are forgetting are two key factors:1. No one can predict the consequences of acts of nature. 2. It was not the President's responsibility to evacuate New Orleans. I believe that was the responsibility of the local government. Let him know there are people in the U.S. with their wits about them that don't point fingers indiscriminately, and he has done as much as any one could in such a catastophe. Carlos GutierrezDorinda, thank you for the kind words of encouragement. The President has been working very hard. He is a great leader and he has confronted this problem head on - he has not passed the buck or pointed fingers. Despite the destruction and tragic loss of life in the Gulf there is a lot of goodwill taking place. Americans across the country are contributing their time, resources and energy to help rebuild the region. I have been very impressed with the outpouring of support and generosity of our citizens. In addition to those efforts, the Bush administration is working closely with local and state officials to ensure that they have the necessary tools to do the job of rebuilding. We are committed to the region and we are dedicating the money and personnel to get the region back on its feet. Today, the President took his eighth trip to the Gulf to check on the progress that is being made and we are seeing progress and hope in the region. I, too, have traveled to the region and I continue to speak with local leaders and business owners about what the administration and the commerce department can do to help. The President has asked us to think outside the box and we are thinking big. As said I previously, today I announced the creation of the Hurricane Contracting Information Center to help minority, women and small businesses participate in the Gulf Coast rebuilding efforts. The center will help these businesses get the information and put them in contact with agencies overseeing the reconstruction in the Gulf Coast. Despite the challenges we are very optimistic and we are working hard. Denise, from Kennesaw, Ga writes: Katrina has devestaed many states. While the homes and businesses are being rebuilt what is going to be done to increase employment for the displaced, so that they may rebuild thier lives and the rising unemployment rate in southern US? Do we need a 21st centry "new deal", to get America's econonmy stable and moving forward. Carlos GutierrezDenise, thanks for your question. As I said earlier in response to Frank’s question, the President has proposed the following three initiatives, among others, to Congress to help with the rebuilding efforts: creating Gulf Opportunity Zones—that would give immediate tax incentives for job creation and tax relief and loan guarantees for small businesses, including minority-owned enterprises; creating Worker Accounts; and the Urban Homesteading Act. As the President has said, it will be private sector investments that will help rebuild and strengthen the Gulf Coast. Job creation in the Gulf Region and around the country is a top priority of the President. In the Gulf, we are working very hard to help families recover, we are helping businesses to get back in business to sell their products and services and we’re also helping workers get back to work. We know that many have been dislocated due to the hurricanes and we’re still assessing the impact that it will have on economy. If there’s a message I’d like to convey it is that our national economy had strong momentum prior to the hurricanes and the national economy will be the economic lifeline to rebuild the Gulf Region. john, from u.s.a. writes: Hey there Carlos You did a great superb fantastic introduction at that hispanic month service I really appreciated that and so did the President What are you planning to do to help rebuild commerce in the gulf coast? Thank you, joseph (please call me john) Carlos GutierrezHi John. I’m glad you enjoyed the event celebrating Hispanic Heritage Month last week! The Department of Commerce Hurricane Contracting Information Center will help U.S. businesses bid on federal contracts in the Gulf Coast by serving as a single point of contact for small, minority and women-owned businesses will be able to get information about potential contracts. I firmly believe that business will be the key to rebuilding the Gulf Coast states and we want to make sure they have the tools they need to participate in the rebuilding efforts. benji, from houston writes: what can businesses do to help rebuild the gulf states? Carlos GutierrezThat’s a great question, Benji. Businesses have already generously contributed hundreds of millions of dollars as well as food, water, medicine, generators and other equipment to help the victims of Hurricanes Katrina and Rita. What the Gulf States need now are the basics of everyday living. They need homes. They need transportation. They need schools. They need grocery stores and gas stations and shopping centers and the full array of services that you find in every community in this great country. In summary, they need business investments. We’re reaching out to companies of all sizes to join in this rebuilding effort. Right now, there may be no better place in America to invest and do business than the Gulf Coast region. If businesses are interested in donating items or looking for more information on how to get involved in the rebuilding efforts, I suggest contacting our Hurricane Contracting Information Center.Lacy, from hendersonville nc writes: I am in High School and Taking Civics and Economics. We have been assigned a project as a secretary of the president cabinet (each a differnt depatment). I was assigned the Department of Commerce. I want to know more information. I was just wondering if you could send me more information on each section of the Department of Commerce. Please it would be very helpful. I am also intrested in a career in Social Services. Please help me out. Thank you. Lacy Carlos GutierrezLacy, interesting question. The Department of Commerce and its component bureaus create the conditions for economic growth and opportunity by promoting innovation, entrepreneurship, competitiveness and stewardship. The Department of Commerce’s mission is linked directly to encouraging the economic growth that benefits all American industries, workers and consumers; enhancing technological leadership and environmental stewardship, and advocating market growth strategies. The responsibilities of the Department of Commerce range from fostering U.S. business and industry to stimulating international trade, measuring and analyzing social development and economic activity, advancing our nation’s scientific and technological capabilities and understanding, predicting, and protecting the natural environment. If you’d like more information on what we do here, visit www.commerce.gov. I applaud your interest in wanting to serve in government. I encourage you to get involved in student government, your local community and other civic interests. The important thing is to get involved. Kevin, from Boca Raton, FL writes: Since we have seen the impact minimally in the short term thus far. What economic impact should the average consumer brace for in the long term and what is your department doing to ease that concern? Carlos GutierrezExcellent question, Kevin. While many people have been dislocated and forced out of work because of Hurricanes Katrina and Rita, we welcomed last week’s news that job losses were less than anticipated. The full extent of the economic damage to the region won’t be known for another couple of months; however, the strength of our economy going into this hurricane season helped to blunt the economic impact to the Gulf Coast states. Now is the time to make sure we keep the fundamentals of our economy strong by passing the President’s economic plan for the Gulf Coast so that jobs can be created and people in the region can get back to work. Importantly, we need to prevent tax increases so that our economy continues to grow. Daniel, from Lakeville, CT writes: Hi Secretary Gutierrez, How is the federal government helping businesses restart their operations along the Gulf Coast? Carlos GutierrezThanks Daniel, that’s an important question. The federal government is working hard on behalf of U.S. companies that have been affected by Hurricanes Katrina and Rita. I’ve already mentioned the Department of Commerce’s new Hurricane Contracting Information Center. However, we are also doing more. The Commerce Department has deployed three National Oceanic Atmospheric Administration (NOAA) response teams to survey priority channels and port locations to help ports re-open. The Economic Development Administration is coordinating with FEMA to deploy up to $7 million to build new or improve existing infrastructure to aid in the economic recovery. In addition, the U.S. Department of Agriculture is making more than $170 million in emergency assistance available to agriculture producers. USDA is also making changes to its Marketing Assistance Loan Program, so producers can obtain “on-farm” grain storage on the ground in addition to grain bins and other normally approved structures. The Small Business Administration has created an opportunity for businesses of all sizes to apply for an SBA disaster loan of up to $1.5 million to cover damages to the property, machinery, and inventory. The Department of Labor created the Katrina Recovery Job Connection to help workers transition back into employment. The sites purpose is to connect job seekers with employers. Labor’s Employee Benefits Security Administration with the Internal Revenue Service has announced an extension of a number of deadlines related to health plan coverage, giving employers additional time to make critical decisions. These are just a few ways the federal government is helping to rebuild businesses in the Gulf Coast. There are many resources being made available to those who were affected. That is why I feel that the Hurricane Contracting Information Center will be a useful tool to companies because it will simplify and speed up the rebuilding efforts in the Gulf Coast. Peter, from near new orleans writes: The federal government has a huge presence here and there's a lot of talk of rebuilding but , local businesses especially minority business are not getting the contracts promised to rebuild. What gives? Carlos GutierrezGood to hear from you Peter. The initial priority following Hurricane Katrina was to get relief quickly to those in need and help from outside the region was necessary. Emergency contracts were issued to companies that had the infrastructure, scale, capabilities and qualifications to respond immediately. In fact, small businesses account for 72% of contract dollars for Katrina recovery efforts The Minority Development Agency at the Department of Commerce has been informed that some minority owned firms are also participating in these contracts at the subcontracting level. It is our priority to see more local and small disadvantaged businesses getting Gulf Region recovery work. That is why FEMA has held outreach events in Alabama, Louisiana and Mississippi with small, local and minority-owned businesses; and why the Minority Business Development Agency is actively trying to identify and match minority owned businesses that have the infrastructure, ca


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