September 2, 2017
The federal government has declared that a major disaster exists for areas impacted by Hurricane Harvey. As a result, the IRS has been permitted to postpone various deadlines for taxpayers and other entities that have annual filing obligations with the IRS, including employee benefit plans.
Texas counties covered under the disaster declaration: Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria, and Wharton.
For Plan Sponsors
For all plans in affected areas that have original due dates (including extensions) between August 23, 2017, and January 31, 2018, the deadline for filing Form 5500 is now extended out to January 31, 2018.
For most calendar year plans, the extended due date for filing the December 31, 2016, Form 5500 was to be October 16, 2017. The IRS has granted an additional three-and-a-half months to complete the filings and, if required, the related audits.
For Plan Participants
The IRS has liberalized a number restrictions on participant withdrawals from qualified plans. Participants with accounts in 401(k) or similar plans in affected areas may be eligible for the following temporary relief through January 31, 2018.
- Hardship distributions will be permitted for any Hurricane Harvey-related hardship, not just those that qualify as unforeseeable emergencies under the standard hardship rules.
- Retirement plan participants who live outside the disaster area may still be permitted to take hardship distributions if needed to assist family members who were impacted by Hurricane Harvey. Qualifying family members include children, parents, grandparents, or other dependents that live or work in the disaster area.
- The requirement to suspend deferrals for six months following a hardship distribution is waived for Hurricane Harvey-related distributions.
- Plan administrators are empowered to streamline the approval process for Hurricane Harvey-related hardship distributions or participant loans in the following ways:
- Documentation requirements for loans and hardship distributions are relaxed. Plan administrators may rely on the representations of plan participants regarding the nature of the hardship and the amount needed. Further, plans that require things like spousal consent for loans and distributions may process withdrawals before all of the needed documentation is assembled.
- Plans that do not currently permit hardship distributions or participant loans may allow them before the plan is formally amended with related provisions.
We at Pension Assurance wish the best for all of those impacted by Hurricane Harvey.