IRS Provides Hurricane Sandy Relief

November 20, 2012 – On November 16th, the IRS issued Announcement 2012-44, which provides some relief from the normal requirements to receive a loan or hardship distribution from a qualified plan.  The period of the relief is for distributions made between October 26, 2012 and February 1, 2013.

The relief only applies to participants whose principal residence, place of employment, or ascendant, descendent, dependent or spouse had a principal place of residence or employment in the covered disaster area on the date of Hurricane Sandy.  A listing of federally declared disaster area can be found at:

For plans that may allow a hardship distribution or a distribution due to unforeseeable emergencies, the plan may allow such distribution even if the plan document does not currently provide for such distribution, and the reasons for a hardship distribution are not restricted to those provided under the Regulations.  In addition, the normal 6-month suspension of elective deferrals does not have to apply.  However, the amount eligible for distribution is still subject to the normal rules regulating the amount and the contribution types that are available for distribution.


Announcement 2012-44 also provides relief from the normal documentation requirements for plan loans and distribution, as long as the plan administrator makes a good-faith effort to comply with the requirements as soon as possible. 

For example, if the plan terms require spousal consent for a loan or distribution and the spouse is deceased, the distribution will not violate plan terms if a death certificate is not obtained at the time of the distribution as long as a reasonable effort is made to obtain the death certificate and it is reasonable to belief that the spouse is deceased.

Plans that do not currently permit loans or hardship distributions may still allow such distributions, as long as the plan is amended to include the provision by the end of the 2013 plan year.  The IRS is not clear on whether an amendment is required by plans that currently allow loans or hardships but do not address Hurricane Sandy-related distributions. 

If you have any questions regarding Hurricane Sandy distributions, please contact your Nyhart consultant.