Special disaster-related rules for use of retirement funds

(a)

Tax-Favored withdrawals from retirement plans

(1)

In general

Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified Iowa disaster distribution.(2)

Aggregate dollar limitation

(A)

In general

For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified Iowa disaster distributions for any taxable year shall not exceed the excess (if any) of—(i)$100,000, over(ii)the aggregate amounts treated as qualified Iowa disaster distributions received by such individual for all prior taxable years.(B)

Treatment of plan distributions

If a distribution to an individual would (without regard to subparagraph (A)) be a qualified Iowa disaster distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified Iowa 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.(C)

Controlled group

For purposes of subparagraph (B), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.(3)

Amount distributed may be repaid

(A)

In general

Any individual who receives a qualified Iowa 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 in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.(B)

Treatment of repayments of distributions from eligible retirement plans other than IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified Iowa disaster distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified Iowa disaster distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.(C)

Treatment of repayments for distributions from IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified Iowa disaster distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified Iowa disaster distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.(4)

Definitions

For purposes of this subsection—(A)

Qualified Iowa disaster distribution

Except as provided in paragraph (2), the term qualified Iowa disaster distribution means any distribution from an eligible retirement plan made on or after the applicable date, and before January 1, 2026, to an individual whose principal place of abode on the applicable date, is located in the Iowa disaster area.(B)

Iowa disaster area

For purposes of paragraph (1), the term Iowa disaster area means—(i)any area within the Iowa counties of Clarke, Harrison, Mills, Polk, Pottawattamie, Ringgold, Shelby, or Union with respect to which a major disaster was declared, during the period beginning on April 26, 2024, and ending on the date which is 60 days after the date of the enactment of this Act, by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, and (ii)any area within the Iowa counties of Clay, Emmet, Lyon, Plymouth, or Sioux with respect to which a major disaster was declared, during the period beginning on June 16, 2024, and ending on the date which is 60 days after the date of the enactment of this Act, by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. (C)

Applicable date

For purposes of this paragraph, the term applicable date means—(i)in the case of a disaster area described in subparagraph (B)(i), April 26, 2024, and (ii)in the case of a disaster area described in subparagraph (B)(ii), June 16, 2024. (D)

Eligible retirement plan

The term eligible retirement plan has the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.(5)

Income inclusion spread over 3-year period

(A)

In general

In the case of any qualified Iowa disaster distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.(B)

Special rule

For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply.(6)

Special rules

(A)

Exemption of distributions from trustee to trustee transfer and withholding rules

For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified Iowa disaster distributions shall not be treated as eligible rollover distributions.(B)

Qualified Iowa disaster distributions treated as meeting plan distribution requirements

For purposes the Internal Revenue Code of 1986, a qualified Iowa disaster distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.(b)

Recontributions of withdrawals for home purchases

(1)

Recontributions

(A)

In general

Any individual who received a qualified distribution may, during the period beginning on the applicable date, and ending on December 31, 2024, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), of such Code, as the case may be.(B)

Treatment of repayments

Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.(2)

Qualified distribution

For purposes of this subsection, the term qualified distribution means any distribution—(A)described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue Code of 1986,(B)received on or after the applicable date, and before December 31, 2024, and(C)which was to be used to purchase or construct a principal residence in the Iowa disaster area.(3)

Applicable date

For purposes of this subsection, the term applicable date means—(A)in the case of a qualified distribution received with respect to the Iowa disaster area described in subsection (a)(4)(B)(i), April 26, 2024, and (B)in the case of a qualified distribution received with respect to the Iowa disaster area described in subsection (a)(4)(B)(ii), June 14, 2024. (c)

Loans from qualified plans

(1)

Increase in limit on loans not treated as distributions

In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual made during the period beginning on the date of the enactment of this Act and ending on December 31, 2025—(A)clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting $100,000 for $50,000, and(B)clause (ii) of such section shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan for one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan.(2)

Delay of repayment

In the case of a qualified individual with an outstanding loan on or after the qualified beginning date from a qualified employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986)—(A)if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on the qualified beginning date and ending on December 31, 2025, such due date shall be delayed for 1 year,(B)any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and(C)in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) shall be disregarded.(3)

Qualified individual

For purposes of this subsection, the term qualified individual means an individual whose principal place of abode on the applicable date described in subsection (a)(4)(C) is located in the Iowa disaster area and who has sustained an economic loss by reason of severe storms, flooding, straight-line winds, or tornadoes beginning on such date.(4)

Qualified beginning date

For purposes of this subsection, the qualified beginning date is the applicable date described in subsection (a)(4)(C).(d)

Provisions relating to plan amendments

(1)

In general

If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i).(2)

Amendments to which subsection applies

(A)

In general

This subsection shall apply to any amendment to any plan or annuity contract which is made—(i)pursuant to any provision of this section, or pursuant to any regulation issued by the Secretary or the Secretary of Labor under any provision of this section, and(ii)on or before the last day of the first plan year beginning on or after January 1, 2026, or such later date as the Secretary may prescribe.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii).

(B)

Conditions

This subsection shall not apply to any amendment unless—(i)during the period—(I)beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and(II)ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect, and

(ii)such plan or contract amendment applies retroactively for such period.

Temporary suspension of limitations on charitable contributions

(a)

In general

Except as otherwise provided in paragraph (2), subsection (b) of section 170 of the Internal Revenue Code of 1986 shall not apply to qualified contributions and such contributions shall not be taken into account for purposes of applying subsections (b) and (d) of such section to other contributions.(b)

Treatment of excess contributions

For purposes of section 170 of the Internal Revenue Code of 1986—(1)

Individuals

In the case of an individual—(A)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer's contribution base (as defined in subparagraph (G) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.(B)

Carryover

If the aggregate amount of qualified contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of clause (i), such excess shall be added to the excess described in the portion of subparagraph (A) of such section which precedes clause (i) thereof for purposes of applying such section.(2)

Corporations

In the case of a corporation—(A)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer's taxable income (as determined under paragraph (2) of section 170(b) of such Code) over the amount of all other charitable contributions allowed under such paragraph.(B)

Carryover

Rules similar to the rules of subparagraph (A)(ii) shall apply for purposes of this subparagraph.(c)

Exception to overall limitation on itemized deductions

So much of any deduction allowed under section 170 of the Internal Revenue Code of 1986 as does not exceed the qualified contributions paid during the taxable year shall not be treated as an itemized deduction for purposes of section 68 of such Code.(d)

Qualified contributions

(1)

In general

For purposes of this subsection, the term qualified contribution means any charitable contribution (as defined in section 170(c) of the Internal Revenue Code of 1986) if—(A)such contribution—(i)is paid during the period beginning on April 24, 2024, and ending on December 31, 2024, in cash to an organization described in section 170(b)(1)(A) of such Code, and(ii)is made for relief efforts in the Iowa disaster area,(B)the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of section 170(f)(8) of such Code) that such contribution was used (or is to be used) for relief efforts described in clause (i)(II), and(C)the taxpayer has elected the application of this subsection with respect to such contribution.(2)

Iowa disaster area

For purposes of paragraph (1), the term Iowa disaster area has the meaning given such term in section 2(a)(4)(B). (3)

Exception

Such term shall not include a contribution by a donor if the contribution is—(A)to an organization described in section 509(a)(3) of the Internal Revenue Code of 1986, or(B)for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) of such Code).(4)

Application of election to partnerships and S corporations

In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made separately by each partner or shareholder.