Welcome to TRA’s Major Disaster Relief and Recovery Resource Page

At TRA, we understand that managing the aftermath of a major disaster can be overwhelming. We want you to know that we are here to support you. The recent legislative changes brought by SECURE 2.0 provide significant relief options through your retirement plan, including 401(k), 457(b), 403(b), and others, for both plan sponsors and participants. These changes offer extended deadlines for filing tax forms, the option to allow special Qualified Disaster Recovery Distributions, and increased loan maximums.

This resource page is designed to guide you through these relief options and address any questions you may have. We are committed to your well-being and are here to support you every step of the way. Together, we can navigate these challenging times and find the solutions you need.

TRA’s Client Services team is ready to consult with you regarding your options related to a major disaster declaration.  If you need guidance or support, please contact our office at 888.872.2364 to be connected to a member of our Client Services team.

Support and Relief Options

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    FEMA - Major Disaster Relief Declaration

    When events like the recent hurricanes Helene and Milton are deemed major disasters, they can be officially declared as such, prompting the government to offer specific relief measures. Beyond financial and housing assistance for affected individuals, families, and businesses, there are also provisions directly related to retirement plans. This relief includes extended filing deadlines for plan sponsors and increased access to retirement funds for plan participants. If you or your employees are in an area declared a Major Disaster, you may be eligible for these benefits.

    If you think you might be located in an area declared to be a Major Disaster by FEMA, you can verify by taking these simple steps:

    • Open the FEMA Major Disaster Relief Declaration Tool
    • Enter Year(s) to narrow the search
    • Choose Declaration Type: Major Disaster Declaration
    • Choose the applicable Incident Type
    • Choose your State or Tribe
    • Click the Search button

    As noted above, relief related to those sponsoring and/or participating in a qualified retirement plan may be available.

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    IRS Deadline Relief

    The IRS has also issued relief related to this disaster for certain tax-related deadlines. Additional information can be found at the IRS Tax Relief in Disaster Situations website and will be announced here if such relief is granted.  Taxpayers should review the IRS disaster relief frequently asked questions, in addition to consulting with their tax advisor to understand the impact of the various disaster related options on their own situation.

    Below are some of the actions that have had relief provided:

    • Filing income, employment and excise tax returns
    • Filing the Form 5500
    • Paying minimum required distributions under IRC Section 401(a)(9)
    • Distributing elective deferrals that exceeded the annual limit under IRC Section 402(g)
    • Distributing or forfeiting contributions to pass the actual deferral percentage (ADP) and actual contribution percentage (ACP) tests
    • Making deductible plan contributions under IRC Section 404(a)
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    Withdrawals

    The SECURE 2.0 Act, passed in December 2022, introduced several changes to retirement plans, including provisions for natural disaster withdrawals and loans (see more here). Specific plan details and implementation may vary based upon Recordkeeper, please contact your Client Relationship Manager to discuss your plan’s options.

    Natural Disaster Withdrawals

    1. Qualified Disaster Recovery Distributions:
      • Eligibility: Participants can take a qualified disaster recovery distribution if their primary residence is located in a federally declared disaster area.
      • Limit: The maximum amount that can be withdrawn is up to $22,000 per disaster.
      • Tax Treatment: These distributions are exempt from the 10% early withdrawal penalty and can be included in income over a three-year period.

    Loans

    1. Increased Loan Limits:
      • Eligibility: Similar to withdrawals, participants whose primary residence is in a federally declared disaster area are eligible.
      • Limit: The maximum loan amount is increased to the lesser of $100,000 or 100% of the participant’s vested account balance.
    2. Repayment Terms:
      • Suspension of Payments: Loan repayments can be suspended for up to one year for individuals affected by the disaster.
      • Extended Repayment Period: The loan repayment period can be extended, allowing for a longer time to repay the loan without incurring penalties.

    These changes aim to provide additional financial flexibility and relief to individuals affected by natural disasters, allowing them to access their retirement funds without facing immediate tax penalties or stringent repayment terms.

    Please note that specific plan details and implementation may vary based upon Recordkeeper.

    Please contact your Client Relationship Manager to discuss your plan’s options.

Pattern

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