04 Feb 2025
Wildfire Relief: Retirement Plan-Disaster Distributions Permitted Without 10% Penalty
Among the many SECURE 2.0 Act changes, Section 331 allows retirement plans (401(k), 403(b), and 457(b) plans) to make in-service qualified disaster recovery distributions to participants stricken by a qualified disaster. Distributions up to $22,000 to a qualified individual (whose principal place of abode is within a federally declared disaster area) are permitted on or after the first day of the incident period of a qualified disaster and prior to 180 days after the first day of the incident period or disaster declaration. These distributions can be taxed over a three-year period and avoid the 10% early distribution penalty tax. Employers also can consider making tax-free payments directly to affected employees using the benefits provided under I.R.C. § 139(a).
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Learn other ways to help retirement plan employees. Most defined contribution plans can be amended to provide employer contributions on qualified student loan payments (QSLPs). These contributions are permitted to be made to an employee's retirement plan account when the employee certifies that a student loan payment has been made. The QSLP is treated like an elective deferral. QSLPs can be included in 401(k), 403(b), and 457(b) plans, and in SIMPLE IRAs. - SECURE 2.0 Act and SECURE Act Resource Kit
Reference this resource kit assembling all Practical Guidance content under the SECURE 2.0 Act and the SECURE Act. While the SECURE 2.0 Act built on the SECURE Act, each sought to improve retirement plan accessibility and incentivize individuals to save for retirement.
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Featuring the latest updates from your Practical Guidance account.
- Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
Stay informed on new developments.- Retirement Plans. EBSA updates rules regarding its Voluntary Fiduciary Correction Program (VFCP). 90 Fed. Reg. 4192 (Jan. 15, 2025). Coincident with the revised VFCP, EBSA amends PTE 2002-51, Prohibited Transaction Exemption 2002-51 to Permit Certain Transactions Identified in the Voluntary Fiduciary Correction Program, to facilitate the VFCP amendments. 90 Fed. Reg. 3667 (Jan. 15, 2025).
- Retirement Plans. IRS updates information about the types of advice provided by Employee Plans Rulings and Agreements, its general procedures for letter ruling and determination letter requests, specific procedures for determination letter requests, and the user fees associated with advice requested from Employee Plans Rulings and Agreements. Proc. 2025-4.
- Health and Welfare Plans. DOL, HHS, and Treasury, with Office of Personnel Management, jointly release FAQs Part 69 which provide additional guidance on the federal independent dispute resolution (IDR) process and on the “gag clause prohibition” set forth in Section 201 of the Consolidated Appropriations Act, 2021. FAQs About Consolidated Appropriations Act, 2021 Implementation Part 69.
- New! Discover Practical Guidance Content and Resources
Review this link for recent updates and this link for the newest additions to Practical Guidance. This guide is designed to help you find the tools and insights you need to work more efficiently and effectively. - Stay informed on SECURE 2.0 Act developments by using our SECURE 2.0 Act Guidance Tracker.
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