Tax Blog

The IRS Offers Hurricane Matthews Relief, But Caution Applies!

Two weeks ago, Hurricane Matthews ravaged the southeast of this country. Peoples’ homes and places of employment were literally washed away with the storm surge. The Federal Emergency Management Agency and the Red Cross have been feverishly providing support, now the IRS has announced that victims of Hurricane Matthews can take loans from 401ks and similar employer based retirement plans. Parts of North Carolina, South Carolina, Georgia, and Florida Qualify. Go to fema.gov/disasters for a complete list of counties. The loans must be taken by March 15, 2017.

The IRS has taken the position that these loans can be used to buy food and shelter.

Caution: 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).

(Announcement 2016-39)

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The Center for Financial, Legal & Tax Planning, Inc.

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