Taxpayers can get a distribution from an applicable eligible retirement plan for personal or family emergency expenses, according to new guidance.
The notice contains several details about these exemptions, including:
- Defining emergency personal expense distributions, including what constitutes "an unforeseeable or immediate" financial need;
- Providing that qualified defined contribution plans or IRAs are eligible to permit emergency personal expense distributions;
- Describing limitations on receiving emergency personal expense distributions; and,
- Providing that individuals receiving emergency personal expense distributions are permitted to repay these distributions to certain plans.
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A taxpayer can receive a distribution from an applicable eligible retirement plan if it is made during the one-year period beginning on the date on which the individual is a victim of domestic abuse by a spouse or domestic partner. The notice:
- Defines domestic abuse victim distributions, including the definition of domestic abuse;
- Provides that IRAs and certain retirement plans not subject to spousal consent requirements are eligible to permit domestic abuse victim distributions;
- Describes the dollar limitation on victim distributions; and,
- Provides that domestic abuse individuals are permitted to repay victim distributions to certain plans.
The Department of the Treasury and the IRS anticipate issuing regulations on the 10% additional tax (including the exceptions to the additional tax) and request comments relating to the notice, specifically on repayments of certain distributions permitted under Sec. 72(t)(2).