The Internal Revenue Service has announced that
recent tax law changes give victims of Hurricane Katrina new
opportunities to draw funds from qualified retirement plans.
Under the new provisions, Katrina victims can make tax-favored withdrawals, recontributions and loans on eligible retirement plans such as annuities and IRAs, according to the IRS.
Distributions must be made on or after August 25 and before January 1, 2007, and are available to people whose principal residence was in the Hurricane Katrina disaster area on August 28 and who sustained an economic loss as a result of the storm.
Those who are eligible can make tax-favored distributions of up to $100,000 on their retirement accounts, according to the IRS.
The distributions count as income, but are not subject to the 10% additional tax on early distributions. If the distribution is recontributed within three years it is treated as a rollover-meaning individuals can file an amended tax return to claim a tax refund, the IRS says.