IRS eases retirement plan loans and distributions to Hurricane Irma victims

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The Internal Revenue Service streamlined the rules Tuesday to make it easier for 401(k)s and similar employer-sponsored retirement plans to make loans and hardship distributions to victims of Hurricane Irma and members of their families.

The relief is similar to relief provided recently to victims of Hurricane Harvey. The IRS is also providing tax-filing and payment relief to Irma victims (see IRS offers tax filing relief to Hurricane Irma victims in Florida and Puerto Rico).

Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, along with state and local government employees with 457(b) deferred-compensation plans, if eligible, can take advantage of the IRS’s streamlined loan procedures and liberalized hardship distribution rules. While IRA participants are typically prohibited from taking out loans, the IRS noted they might be eligible to receive distributions under the newly liberalized procedures.

Retirement plans can offer the relief to employees and some members of their families who reside or work in the disaster areas affected by Hurricane Irma and that are designated for individual assistance by the Federal Emergency Management Agency. For a list of those locations, go to To qualify for the relief, hardship withdrawals need to be made by Jan. 31, 2018.

The IRS is also loosening some of the procedural and administrative rules that usually apply to retirement plan loans and hardship distributions. That means eligible retirement plan participants can access their money more quickly with less red tape. On top of that, the six-month ban on 401(k) and 403(b) contributions that typically affects employees who take hardship distributions won’t apply.

Victims of Hurricane Irma will be allowed to take a hardship distribution or borrow up to the specified statutory limits from their retirement plan. Someone who lives outside the disaster area can also take funds out a retirement plan loan or hardship distribution and use it to help a son, daughter, parent, grandparent or other dependent who resided or worked in the area impacted by the storm.

Retirement plans will be permitted to make loans or hardship distributions before they’re formally amended to offer such features. On top of that, the plan can ignore the reasons that typically apply to hardship distributions, enabling them, for instance, to be used for food and shelter. If the plan requires documentation before it can make a distribution, the plan can relax the requirement.

The IRS stressed that the tax treatment of loans and distributions remains unchanged, however. Usually, retirement plan loan proceeds are tax-free if they’re repaid within five years or less. Under current law, hardship distributions are typically taxable and subject to a 10-percent early-withdrawal tax.

More details were spelled out Tuesday in Announcement 2017-13, which allows easier access to Hurricane Irma victims’ funds held in workplace retirement plans and in IRAs, for the period beginning Sept. 4, 2017, and ending Jan. 31, 2018.

More information about tax relief for Hurricane Irma victims is available on the IRS disaster relief page. For additional information about government-wide relief efforts in the wake of the hurricane, see

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Disaster recovery Retirement planning Tax regulations 401(k) IRAs IRS