The department of Treasury and the Internal Revenue Service (IRS) recently issued Notice 2005-92, a measure that provides guidance relating to the application of two provisions of the Katrina Emergency Tax Relief Act of 2005 (KETRA) for Hurricane Katrina victims and employer-sponsored retirement plans and IRAs.
The notice states, among other things, that employers do not have to offer individuals a direct rollover with respect to the Katrina distribution, and the plan administrator does not have to provide a 402(f) notice. In addition, the plan administrator does not have to withhold 20% of the distribution as generally required by Section 3405(c)(1). However, the distribution is subject to the voluntary withholding requirements of Section 3405(b).
The notice also allows a plan sponsor or plan administrator to rely on the reasonable representations of the individual requesting the distribution that he or she meets the KETRA residence and economic loss requirements.