May 24, 2013 (PLANSPONSOR.com) – A new bill could assist homeowners affected by Hurricane Sandy by allowing them, under certain conditions, to avoid tax penalties for making withdrawals from their individual retirement accounts (IRAs) or 401(k) plans.
The bill, The Hurricane Sandy Tax Relief Act of 2013 (H.R. 2137), would allow taxpayers whose principal place of residence falls within the presidentially designated Hurricane Sandy Disaster Area and who suffered a loss as a result of the hurricane to take distributions from these retirement vehicles without suffering the usual tax penalties, provided that the amounts withdrawn are repaid within three years. The bill is modeled after a similar one that was passed into law in the wake of Hurricane Katrina.
Bipartisan sponsors of the bill include Bill Pascrell, Jr. (D-New Jersey), Joseph Crowley (D-New York), Rodney Frelinghuysen (R-New Jersey), Michael Grimm (R-New York), John Larson (D-Connecticut), Frank LoBiondo (R-New Jersey), Charles Rangel (D-New York), Tom Reed (R-New York), Carolyn McCarthy (D-New York) and Jon Runyan (R-New Jersey).
“This legislation will go a long way towards filling this gap by providing immediate tax relief to those impacted by Sandy's devastation,” said Pascrell. “Similar tax relief has been passed following some of our country's worst natural disasters, and Sandy victims deserve nothing less than the same treatment.”
“This critical legislation will offer assistance through the tax code to families, and businesses alike who continue to recover after Hurricane Sandy,” said Runyan. “Specifically, this bill provides temporary tax incentives that can help ease the burden of losses incurred due to the storm.”
McCarthy added, “We’re asking our colleagues in Congress to help the millions of people affected by Sandy through this common sense and fair tax relief, because it’s the right thing to do and helping each other is who we are as Americans.”
The full text of the bill can be viewed though the Library of Congress’ THOMAS website.