What is a natural disaster hardship withdrawal?

Under the SECURE 2.0 Act, special rules apply for individuals affected by federally declared disasters.

If you:

• Live in a federally declared disaster area, and
• Experience an economic loss due to the disaster

You may be eligible to withdraw up to $22,000 from your retirement account.

Key points:

• The 10% early withdrawal penalty may be waived.
• The distribution is still taxable.
• Taxes may be spread over three years.
• You may repay the distribution within three years to avoid taxation.

These provisions are optional for plans, so availability depends on your employer’s plan.

Disaster-related plan loans

For qualifying disasters:

• The maximum loan limit may increase to $100,000 or 100% of your vested balance (normally $50,000 or 50%).
• Loan repayments due within 180 days of the disaster may be delayed for up to one year.
• The repayment period may be extended.

Check with your plan administrator to confirm availability.