IR-2024-170: Retirement plan distributions: IRS provides guidance on certain exceptions from 10% additional tax for emergency personal or family expenses and for survivors of domestic abuse

IRS Newswire June 20, 2024
News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News Home IRS Resources Contact My Local Office Filing Options Forms & Instructions Frequently Asked Questions News Taxpayer Advocate Where to File IRS Social Media	Issue Number:    IR-2024-170 Inside This Issue Retirement plan distributions: IRS provides guidance on certain exceptions from 10% additional tax for emergency personal or family expenses and for survivors of domestic abuse  WASHINGTON – The Internal Revenue Service today issued Notice 2024-55, which provides guidance on exceptions to the additional tax when taking early permissible retirement plan distributions for emergency personal expenses and for victims of domestic abuse.  This was added by the SECURE 2.0 Act of 2022, and the provisions became effective on January 1, 2024.  Emergency personal expense distributions  The notice provides that a taxpayer is permitted to receive a distribution from an applicable eligible retirement plan to meet unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses. The notice:  defines emergency personal expense distributions, including what is an unforeseeable or immediate financial need; provides that qualified defined contribution plans (including section 401(k) plans), section 403(a) annuity plans, section 403(b) plans, governmental section 457(b) plans or IRAs are eligible to permit emergency personal expense distributions; describes the limitations (both dollar amount and frequency) on receiving emergency personal expense distributions; and provides that individuals receiving emergency personal expense distributions are permitted to repay these distributions to certain plans.  Distributions to victims of domestic abuse  The notice also provides that a taxpayer is permitted to receive a distribution from an applicable eligible retirement plan if made during the one-year period beginning on the date on which the individual is a victim of domestic abuse by a spouse or domestic partner. The notice:  defines domestic abuse victim distributions, including the definition of domestic abuse; provides that IRAs and certain retirement plans that are not subject to the spousal consent requirements under sections 401(a)(11) and 417 are eligible to permit domestic abuse victim distributions; describes the dollar limitation (indexed for inflation) on receiving domestic abuse victim distributions; and provides that domestic abuse individuals are permitted to repay domestic abuse victim distributions to certain plans.  The notice also provides guidance to applicable eligible retirement plans on the plan requirements relating to emergency personal expense distributions and domestic abuse victim distributions, including that it is optional for a plan to permit these types of distributions.     In addition, the notice provides that the Department of the Treasury and the IRS anticipate issuing regulations on the 10% additional tax (including the exceptions to the 10% additional tax) and request comments relating to the notice. Comments are specifically requested on repayments of certain distributions permitted under section 72(t)(2).  Taxpayers should know that these distributions are includible in gross income but are not subject to the 10% additional tax. Individuals report early distributions that are not subject to the 10% additional tax on line 2 of Form  5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts. In tax year 2021, the latest year for which the IRS has statistics, about 608,000 individuals reported that early distributions from qualified plans (including IRAs) were not subject to the 10% additional tax. Back to Top         Thank you for subscribing to the IRS Newswire, an IRS e-mail service. If you know someone who might want to subscribe to this mailing list, please forward this message to them so they can subscribe. This message was distributed automatically from the mailing list IRS Newswire. Please Do Not Reply To This Message.

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