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Hurricane, Wildfire Victims May Get OK to Tap 401(k)s

Nov. 9, 2018, 11:10 PM

Taxpayers who suddenly need to rebuild their lives after weathering natural disasters, including devastating hurricanes and rampant wildfires, could use tax-free retirement funds to do so, the IRS said in newly proposed regulations.

The updated rules, issued Nov. 9, would give victims of Hurricane Florence, Hurricane Michael, and the inferno currently wending its way through Southern California until March 2019 to take hardship distributions from 401(k) accounts. Penalty-free withdrawals for those in dire need are typically reserved for account holders struggling to cover housing payments, medical bills, higher education costs, or funeral expenses.

This expansion is limited to distributions ...