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In an Announcement and accompanying news release, as part of the relief provided to victims of Hurricane Sandy, IRS has eased the rules for 401(k) and similar employer-sponsored retirement plans to make loans and hardship distributions to storm victims and members of their families.

Under Ann. 2012-44, a “qualified employer plan” will not be treated as failing to satisfy any requirement under the Code or regs merely because the plan makes a loan or a hardship distribution for a need arising from Hurricane Sandy, to an employee or former employee whose principal residence or place of employment on Oct. 26, 2012 was located in one of the counties or Tribal Nations that have been identified as covered disaster areas.

Plan administrators may rely on representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution will be treated as a hardship distribution for all purposes under the Code and regs.

The amount available for a hardship distribution is limited to the maximum amount that would be permitted to be available for a hardship distribution under the plan under the Code and regs. However, the relief provided by Ann. 2012-44 applies to any hardship of the employee, not just the types enumerated in the regs, and no post-distribution contribution restrictions are required.

To qualify for the relief under this announcement, a hardship distribution must be made on account of a hardship resulting from Hurricane Sandy and be made on or after Oct. 26, 2012, and no later than Feb. 1, 2013.

In addition, a retirement plan will not be treated as failing to follow procedural requirements for plan loans (in the case of retirement plans other than IRAs) or distributions (in the case of all retirement plans, including IRAs) imposed by the terms of the plan merely because those requirements are disregarded for any period beginning on or after Oct. 26, 2012, and continuing through Feb. 1, 2013, with respect to distributions to individuals described above, provided the plan administrator (or financial institution in the case of distributions from IRAs) makes a good-faith diligent effort under the circumstances to comply with those requirements. However, as soon as practicable, the plan administrator must make a reasonable attempt to assemble any forgone documentation.