Thursday, September 29, 2005

U.S. eases Katrina victims' access to retirement funds

U.S. eases Katrina victims' access to retirement funds: "Government eases Katrina victims’ access to retirement savings

By Margaret M. Clark

The federal government has alleviated the severe tax consequences of early retirement plan withdrawals for victims of Hurricane Katrina and removed roadblocks standing between them and use of retirement savings to help rebuild their lives. The action came in the form of legislation from Congress together with guidance from the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL).

The Katrina Emergency Tax Relief Act of 2005 (KETRA, H.R. 3768) was approved by Congress Sept. 21 and signed into law by President Bush Sept. 23. It allows penalty-free distributions up to $100,000 from 401(k) and similar tax-favored retirement plans to people who lived in the Hurricane Katrina disaster area and suffered economic loss because of the storm."

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