Lions and tigers and bears, oh, my! Well, maybe floods, fires and earthquakes, oh, my. If a disaster occurs, its effect on a retirement plan’s compliance with tax law and regulations just might not be prominent on the minds of plan administrators, service providers, employers and participants. But the impending onset of hurricane season alone makes the matter worth considering. And it is on the IRS’ radar screen.
Fortunately, that can be good news. When something occurs that is declared a disaster by the president, the IRS will postpone certain retirement plan and IRA deadlines for affected taxpayers. Most such disasters are the result of severe storms, but they may also be wildfires, flooding or earthquakes. Affected taxpayers are generally people who live in or have a business in an area the disaster directly affects.
Soon after a disaster is declared, the IRS will issue a news release describing the:
- type of relief (which deadlines are being postponed),
- taxpayers eligible for relief, and
- duration of the relief period.
In section 8 of Revenue Procedure (Rev. Proc.) 2007-56, the IRS spells out the retirement plan and IRA deadlines the IRS may postpone because a disaster has taken place. It is possible that not all of the deadlines the guidance lists may be postponed; relevant factors include when a disaster occurred and how severe it was. As a general principle, however, unless the news release the IRS issues concerning relief for a particular disaster limits the relief, all the deadlines Rev. Proc. 2007-56 enumerates will be postponed.
Among the deadlines and functions Rev. Proc. 2007-56 addresses include:
- distributions from IRAs;
- contributions to IRAs;
- satisfying the requirements of Internal Revenue Code Sections 401(a) and 403(a);
- rollover distributions;
- IRA trustees or issuers providing information concerning IRAs to IRA owners;
- filing Form 5500; and
- self-correcting operational failures.
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