IRS to allow access to retirement accounts for flood victims

How nice of those thieving bastards.

Anyone considering the move should consult with a financial and tax advisor before they get stuck.

ETA: I just read the IRS ruling. The early penalty is NOT waived. The "relief" simply defers the verification process for hardship withdrawals from 401(k)s and other employer plans. This is quite literally the least they could possibly do.

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Anyone considering the move should consult with a financial and tax advisor before they get stuck.

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Just so people can read it one more time.

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Anyone considering the move should consult with a financial and tax advisor before they get stuck.

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holla

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so this would be a good time to hedge that bet

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Cash in investments for a house that will probably lose value because it's been flooded? Nah

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normal benefits of using your own money over someone else's.

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Borrowing money is as cheap as it has ever been

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Cash in investments for a house that will probably lose value because it's been flooded?

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No, not necessarily.

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The Internal Revenue Service announced Tuesday that it will grant the regulatory waiver requested by Sen. Bill Cassidy that will allow those impacted by the flood early access to retirement funds without penalty.

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The article is poorly written. The penalty will still apply for actual distributions. No exception is being made. They simply "cut the red tape" for the time being, but documentation supporting the hardship will still be required after Jan 2017.

ETA:

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In addition, a retirement plan will not be treated as failing to follow procedural requirements for plan loans (in the case of retirement plans other than IRAs) or distributions (in the case of all retirement plans, including IRAs) imposed by the terms of the plan merely because those requirements are disregarded for any period beginning on or after August 11, 2016, and continuing through January 17, 2017, with respect to loans or distributions to individuals described in the first paragraph under “Relief”, above, provided the plan administrator (or financial institution in the case of distributions from IRAs) makes a good-faith diligent effort under the circumstances to comply with those requirements. However, as soon as practicable, the plan administrator (or financial institution in the case of IRAs) must make a reasonable attempt to assemble any forgone documentation. For example, if spousal consent is required for a plan loan or distribution and the plan terms require production of a death certificate if the employee claims his or her spouse is deceased, the plan will not be disqualified for failure to operate in accordance with its terms if it makes a loan or distribution to an individual described in the first paragraph under “Relief” in the absence of a death certificate if it is reasonable to believe, under the circumstances, that the spouse is deceased, the loan or distribution is made no later than January 17, 2017, and the plan administrator makes reasonable efforts to obtain the death certificate as soon as practicable. For purposes of this announcement, “retirement plan” has the same meaning as “eligible retirement plan” under § 402(c)(8)(B).

Taxpayers are reminded that in general the normal spousal consent rules continue to apply, and, except to the extent the distribution consists of already-taxed amounts, any distribution made pursuant to the relief provided in this announcement will be includible in gross income and generally subject to the 10-percent additional tax under § 72(t).

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10-percent additional tax under § 72(t).

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How the frick did we end up with a system that is allowed to penalize us for using our own money?

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So teachers in TRSL who live in one of the disaster declared parishes can pull out their contributions? Is there a limit?

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The way I understand it, it depends on the actual system/plan itself. This ruling just gives the plan less filing requirements if/when they allow a hardship withdrawal.

Also, keep in mind that the ruling does NOT remove the income tax burden or the potential 10% early withdrawal penalty on distributions that would normally be taxed and penalized.