Retirement plan sponsors and participants get hurricane relief 

October 11, 2024

IRS has extended a host of tax filing and payment deadlines for retirement plan sponsors and participants affected by Hurricanes Helene and Milton. IRS’s relief automatically triggers the same extension for certain filings to the Pension Benefit Guaranty Corp. (PBGC). The SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328) also lets sponsors to offer affected participants access to their retirement savings and other relief.

IRS has extended until May 1, 2025, certain filing and payment deadlines for  individuals that live or have a business in areas declared by President Biden to be major disaster areas eligible for individual assistance from the Federal Emergency Management Agency (FEMA). The extension applies to deadlines occurring after the first day of the incident period (which varies by storm and state) through May 1, 2025. The disaster areas and incident periods for Hurricane Helene are shown in this table:

For Hurricane Milton, President Biden declared a major disaster for the remaining 26 counties in Florida not covered by the declaration for Helene. The incident period for these counties started on Oct. 5. IRS’s relief announcement for these counties is available here.

For both storms, the relief will also become available to any additional areas that receive major disaster declarations after IRS’s announcement of the relief.

IRS’s extension applies to all actions identified in Internal Revenue Code (IRC) Section 7508(a)(1) and Rev. Proc. 2018-58. For retirement plan sponsors and participants, relevant actions include the following:

• Filing income, employment and excise tax returns
• Filing the Form 5500, Annual Report/Return of Employee Benefit Plan series
• Paying minimum required distributions under IRC Section 401(a)(9)
• Distributing elective deferrals that exceeded the annual limit under IRC Section 402(g)
• Distributing or forfeiting contributions to pass the actual deferral percentage (ADP) and actual contribution percentage (ACP) tests
• Making deductible plan contributions under IRC Section 404(a)

In addition to the above, participants get an extension for the following relevant actions:

• Electing to withdraw automatic contributions from an eligible automatic contribution arrangement (EACA) during the 90-day period beginning with the first such contribution
• Making eligible rollover distributions within 60 days of the date the participant received the distribution
• Recharacterizing IRA contributions (i.e., transferring from a Roth to a traditional IRA or vice versa)
• Withdrawing contributions to an individual retirement account (IRA) before the tax-return due date

Not all tax-related deadlines during the relief period are covered by IRS’s announcement. Examples of acts not subject to the extension include:

• Making minimum required contributions under IRC Section 430
• Correcting failed minimum coverage and nondiscrimination tests
• Sending annual auto-enrollment and safe harbor notices
• Distributing the Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 

Sponsors struggling to meet these deadlines or others not covered by IRS’s extension might want to consult with legal counsel.

Under PBGC’s disaster relief policy, whenever IRS announces disaster relief extending the Form 5500 deadline, PBGC automatically gives the same extension to most filing and payment deadlines falling during IRS’s relief period. The relief is available if the person responsible for the filing, payment or other action under PBGC’s regulations (or a person responsible for providing information or assistance necessary to complete the action) is located in the disaster area.

Covered filings. Defined benefit plan sponsors and administrators covered by IRS’s disaster relief announcements for Hurricanes Helene and Milton now have until May 1, 2025, to submit certain PBGC filings, including:

• Premium filings (which are due on Oct. 15, 2024, for plans with calendar-year premium years)
• ERISA Section 4010 reporting for certain underfunded plans
• Post-event notices (Form 10) for active participant reductions, failures to make required funding payments, distributions to substantial owners, changes in controlled group, extraordinary dividends or stock redemptions, transfers of benefit liabilities and applications for minimum funding waivers

Some filings not extended. PBGC’s automatic extension does not apply to certain filings PBGC considers particularly important or time-sensitive, and which may indicate a high risk of harm to pension plan participants or the agency’s insurance program. However, employers can request individual extensions for the filings. These filings include:

• Advance notices of reportable events (Form 10-Advance)
• Post-event notices (Form 10) for failures to make required contributions under $1 million, inability to pay benefits when due, liquidation, loan default and insolvency or similar settlement
• Notices of large missed contributions (Form 200)
• Actions related to distress terminations for which PBGC has issued a distribution notice

Notice to PBGC required. Filers relying on the automatic relief must notify PBGC of their eligibility on or before the last day of the relief period. The notice requirements vary by filing. Information on how to notify PBGC is available on the agency’s disaster relief website.

SECURE 2.0 allows sponsors to offer special disaster relief to participants affected by natural disasters. Sponsors can give participants increased access to their retirement savings through a special distribution option and higher plan loan cap, relief from plan loan repayments and the ability to repay unused hardship distributions taken to buy or build a principal residence in a disaster area. 

Section 401(k), 403(b), governmental 457(b) and money purchase pension plans can let eligible participants withdrawal up to $22,000 in “qualified disaster recovery distributions” (QDRDs). These distributions aren’t subject to the 10% penalty tax on withdrawals before age 59-1/2. Participants are eligible if they live in a disaster area and have sustained an economic loss because of the storm. Plan sponsors and administrators can rely on participants’ reasonable representations of eligibility for the relief absent actual knowledge to the contrary.

QDRDs can be made up to 179 days after the first day of the incident period or, if later, the date of the disaster declaration (these dates differ from state to state). See the table under SECURE 2.0 relief schedule below for the last day plans can make QDRDs in each state. Plans can offer QDRDs as a separate distribution option that’s deemed to satisfy the IRC’s rules allowing distributions only upon certain events (such as termination from employment). If a plan doesn’t offer QDRDs as a separate distribution option, eligible participants can still take any distribution that may be available under the plan (such as a hardship distribution) and claim relief from the early withdrawal penalty (if applicable) on their tax returns.

Participants can repay QDRDs to a retirement plan that accepts rollover contributions or to an IRA within three years of the date of the distribution.

Section 401(k), 403(b) and governmental 457(b) plans (but not money purchase pension plans) can offer participants who satisfy the eligibility conditions for QDRDs discussed above a higher plan loan limit and suspension of loan repayments.

Higher loan cap. Plans can double the maximum allowable plan loan amount — to the lesser of $100,000 or 100% of the vested benefit — for participants eligible for the relief. Plans can make these loans during the 180-day period that begins on the first day of the incident period or, if later, the date of the disaster declaration (these dates differ from state to state). See the table under SECURE 2.0 relief schedule below for the last day plans can make loans under the higher cap in each state.

Suspension of loan repayments. Plans can also suspend for up to one year plan loan repayments owed by affected participants during the incident period and the immediately following 180-day period. (The incident period is still ongoing in each state with a disaster declaration, so the end date for the maximum permissible loan suspension period can’t be determined on the date of this article’s publication.) When a loan is suspended, all subsequent payments must be adjusted to reflect the delay period and any interest that accrued during the delay. 

IRS FAQs confirm that sponsors offering loan suspensions can follow prior IRS guidance in Notice 2005-92 on similar relief for victims of Hurricane Katrina. That notice includes a safe harbor method for applying a loan suspension. Under the safe harbor, plans can suspend repayments for up to the entirety of the incident period plus 180 days. At the end of the suspension, the loan term is extended by the length of the suspension, and the loan balance is adjusted for interest accrued during the suspension and reamortized so the balance can be paid off in level installments for the remainder of the loan period.

Repayment of unused hardship distributions for home purchases. Participants in 401(k) and 403(b) plans can repay hardship distributions taken to purchase or build a principal residence in the disaster area if they were not used because of the storm. The relief is available for hardship distributions taken 180 days before the start of the incident period through 30 days after the end of the period. Repayments are treated as eligible rollover distributions and can be made to any qualified or 403(b) plan that accepts rollovers or to an IRA. Repayment can be at any time during the 180-day period that begins on the first day of the incident period or, if later, the date of the disaster declaration (these dates differ from state to state). See the table under SECURE 2.0 relief schedule below for the last day participants can repay their unused hardship distributions.

The following table shows the last day plans can make QDRDs and loans with the increased cap and accept repayment of unused hardship distributions.

Sponsors that offer the relief will need to amend their plan documents. The amendment deadline for SECURE 2.0’s provisions will apply to sponsors that offer any of the relief for the storms. That deadline is Dec. 31, 2026 (certain collectively bargained plans have an additional two years, and governmental plans have an additional three years). However, sponsors can offer the relief to their employees immediately, even if their plan documents don’t currently provide for it.

• IRS provides relief for Milton (IRS, Oct. 11, 2024)
• IRS provides relief for Helene (IRS, Oct. 1, 2024)
• Disaster relief frequently asked questions: Retirement plans and IRAs under the SECURE 2.0 Act of 2022 (IRS, May 6, 2024)
• Disaster assistance and emergency relief for individuals and businesses (IRS, updated regularly)
• Tax relief in disaster situations (IRS, updated regularly)
• Disaster relief (PBGC, updated regularly)
• Disaster information (FEMA, updated regularly)

• IRS FAQs address SECURE 2.0 disaster relief (May 17, 2024)
• Taking a closer look at SECURE 2.0’s penalty-free distribution provisions (March 13, 2023)
• User’s guide to SECURE 2.0 (regularly updated)