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IRS and Congress to Provide Hurricane Katrina Pension Relief Soon

ASPPA Taking an Active Lead in Working With IRS and Congress

Brian H. Graff, Executive Director, American Society of Pension Professionals & Actuaries, recently reported to members about their efforts on pension rule relief as a result of Hurricane Katrina. The following is a summary of what both the IRS and Congress are considering.


  • To issue specific guidance as today, September 9th, but no later than next week.
  • Katrina-related hardship distributions will be automatically deemed to satisfy the hardship rules.
  • Plans in the affected areas will be permitted to make hardship distributions or allow loans even if there are no provisions allowing for hardships or loans. Plans will be given an extended period of time to retroactively amend their plans to add such provisions.
  • Reduce the loan documentation needed to process a loan in order to allow plans to expedite loan requests.


ASPPA is working closely with Senator Grassley (R-IA) and Senator Baucus (D-MT) on a relief package related to qualified retirement plans. The bill is expected to be introduced today, September 9th. It could be taken up as early as next week in the Senate and the House as part of a larger Katrina relief aid bill.

Provisions of the bill would include:

  • The 10-percent penalty for early withdrawals would be waived for Katrina-related hardship distributions.
  • Income tax inclusion of the amount of the hardship distribution could be spread over a 3-year period.
  • Hardship distributions could later be re-contributed to the plan within a 3-year period without any impact on contribution limits.
  • Outstanding loan repayments could be suspended for up to 12 months.
  • Loan limits would be doubled. Participants could thus borrow up to 100 percent of their account balance not to exceed $100,000.
  • All filing and funding deadlines would be extended by a minimum of six months, with a generous provision for further extensions.

Department of Labor

The Department of Labor has extended the deadline for filing Form 5500 and Form 5500 EZ annual report/returns due to property damage and destruction from Hurricane Katrina in Alabama, Louisiana, and Mississippi.

Rick Meigs, President, 401khelpcenter.com

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