Page 4 - DCAC December 2024 Files

Secure 2.0 (Section 331): Disaster Relief

The IRS recently issued Fact Sheet 2024-19, which addresses the rules for plans permitting
optional Qualified Disaster Recovery Distributions (QDRD) and plan loans for employees impacted
by federally declared disasters under SECURE 2.0.

 Empower is making the distributions available targeting 10/15/2024 and the loan relief
available targeting late 2025/early 2026.

 A participant must be a qualified individual that has been affected by a qualified disaster
to take advantage of the disaster recovery relief.

 A qualified disaster is any disaster the US president declares as a major disaster after
December 27, 2020.

o Available beginning the first day of the incident period and before the date that is
180 days after the latest of the first day of the incident period or disaster: or the
date of the disaster declaration.

 A person whose principal residence is in the qualified disaster area during the incident
period and has an economic loss because of the qualified disaster is a qualified individual.

o Economic loss is defined broadly to include real or personal property damage,
displacement from home and temporary or permanent layoffs. Plans may rely on a
participant’s reasonable representation of the eligibility criteria for disaster relief.

 Qualified disaster recovery distributions are limited to an aggregate amount of $22,000
from all plans and IRAs per disaster.

o Plans allowing incoming rollovers must permit the repayment of distributions
within 3 years of the distribution

 Distributions are not subject to the 10% early withdrawal penalty and the
participant may elect to be taxed over a 3-year period beginning in the year
of distribution or may elect to have the full amount taxed in the year of
distribution.

 Loans up to $100,000 will become available from Empower later in 2025 or early 2026.

o Employers may want to review and revise loan policy documents as appropriate to
allow for multiple loans.