Waiver of 10-percent penalty on qualified natural disaster distributions from qualified retirement plans

(a)

In general

Section 72(t)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(H)

Qualified natural disaster distributions

(i)

In general

Any qualified natural disaster distribution. (ii)

Cross reference

For definitions and rules related to qualified natural disaster distributions, see paragraph (11).

(b)

Definitions and special rules

Section 72(t) of such Code is amended by adding at the end the following new paragraph:

(11)

Qualified natural disaster distributions

(A)

In general

Except as provided in subparagraph (B), the term qualified natural disaster distribution means any distribution from an individual retirement plan, or from amounts attributable to employer contributions made pursuant to elective deferrals described in subparagraph (A) or (C) of section 402(g)(3) or section 501(c)(18)(D)(iii), to an individual if— (i)such individual sustained an economic loss by reason of a federally declared disaster, (ii)the principal place of abode of such individual on the disaster declaration date is in the disaster area, and (iii)such distribution is made during the 1-year period beginning on the disaster declaration date. (B)

Aggregate dollar limitation

(i)

In general

The aggregate amount of distributions received by an individual which may be treated as qualified natural disaster distributions for any taxable year with respect to any federally declared disaster shall not exceed the excess (if any) of— (I)$100,000, over (II)the aggregate amounts treated as qualified natural disaster distributions with respect to such federally declared disaster received by such individual for all prior taxable years. (ii)

Treatment of plan distributions

If a distribution to an individual would (without regard to clause (i)) be a qualified natural disaster distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such distribution as a qualified natural disaster distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000. (iii)

Controlled group

For purposes of clause (ii), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414. (C)

Amount distributed may be repaid

Any individual who receives a qualified natural disaster distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions to an individual retirement plan of such individual in an aggregate amount not to exceed the amount of such distribution. The dollar limitations otherwise applicable to contributions to individual retirement plans shall not apply to any contribution made pursuant to the preceding sentence. No deduction shall be allowed for any contribution pursuant to this subparagraph. (D)

Federally declared disaster

For purposes of this paragraph— (i)

In general

The term federally declared disaster means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. (ii)

Disaster area

The term disaster area means the area so determined to warrant such assistance. (iii)

Disaster declaration date

The term disaster declaration date means the date of such determination.

(c)

Effective date

The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.