Plan participants impacted by federally–declared natural disasters during 2020 may qualify for additional relief.
Recently, Congress passed a new Relief Act known as the Consolidated Appropriations Act of 2021 (CAA). The CAA provides relief for individuals affected by natural disasters that occurred between January 1 and December 27, 2020. A federal disaster declaration must have been declared on or before February 25, 2021 for individuals to be eligible for relief in those areas.
Under part of the CAA, participants under qualified retirement plans who were impacted by federally–declared natural disasters during 2020 received additional relief. (Note: The CAA does not extend last year’s CARES Act relief.)
Relief Provisions
For retirement plans who adopt these provisions, individuals who reside in federally-declared disaster areas may be eligible for the following:
Qualified Disaster Distributions (QDD): Individuals may request distributions up to $100,000 from their retirement plan. Similar to the CARES Act, those requesting QDDs may re-contribute the distributions over three years and any taxes due may be spread over three years. Individuals have until June 25, 2021 request a QDD.
Disaster-Related Plan Loans: Plan Administrators may increase loan limits up to $100,000, or 100% of the account value from qualified retirement plans. Repayment of disaster-related plan loans and current loans may be suspended beginning on the first day of the disaster period (as declared by FEMA) and ending 180 days from the last day of the disaster period. Loan interest is to continue to accrue during the suspension period.
Next Steps
For annuities classified under a Qualified Retirement Plan, employers must approve the inclusion of CAA in their retirement plan. Your Plan Administrator is in the best position to know if CAA is applicable.
If applicable, employees can complete the necessary withdrawal or loan paperwork and submit to NLG with the required Plan Administrator/Third Party Administrator approval.
The 2020 disasters eligible for relief may include:
- Alabama (Hurricane Sally, Sep 2020)
- Arkansas (Storms & Tornados, Mar 2020)
- California (Wildfires Aug 2020)
- Louisiana (Hurricane Laura, Aug 2020)
- Oregon (Wildfires, Sep 2020)
- Tennessee (Tornados, Mar 2020)
TC120390(0421)1
