WASHINGTON Nov 16 Cash-strapped victims of
Superstorm Sandy will be able to tap their retirement accounts
for hardship withdrawals and loans, the U.S. Internal Revenue
Service announced on Friday.
Those with employer-provided plans, such as 401(k) plans,
403(b) plans and 457(b)deferred compensation plans, may be able
to use streamlined loan procedures, the IRS said.
Those with individual retirement accounts (IRAs) may not
take loans, but they may be able to take hardship withdrawals.
The IRS announcement is the latest in a string of relief
measures from the tax agency, which has been deferring deadlines
and easing other tax rules to help taxpayers struggling with
home damage, loss of power and related troubles.
The IRS said it would trim red tape involved when
account-holders try to tap retirement plans. That should help
those needing cash quickly for home repairs or temporary
Hardship withdrawals are typically narrowly defined, and
aimed at items like funeral costs or medical expenses. But the
IRS guidance says that in the case of Sandy withdrawals, they
could be used for items like food and shelter as well.
The agency also said parents and other relatives who live
outside the disaster area could tap retirement accounts for
loans or withdrawals to help family members hurt by the storm.
People who wanted to take advantage of these fast track
rules would have to make their withdrawals by Feb. 1, 2013, the
Hardship distributions from tax-deferred accounts typically
are subject to income taxes and a 10 percent early withdrawal
penalty. In contrast, loans are tax free if repaid in five years