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September 16, 2005
Hurricane Victims Can Tap into 401(k) Plans

The Internal Revenue Service will allow 401(k) plans and similar plans such as 403(b)s to make loans and hardship distributions to victims of Hurricane Katrina.

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The plans will be permitted to make hardship distributions to victims of Hurricane Katrina through March 31, 2006, according to the IRS.

"Today's action will allow those devastated by Hurricane Katrina access to much-needed money as they work to rebuild their lives," says Treasury Secretary John Snow.

Meanwhile, the Department of Labor announced that it will not treat any person as having violated the provisions of title I of the Employee Retirement Income Security Act solely because they complied with the provisions of IRS announcement.

The IRS announcement, in conjunction with the DOL statement, expands the circumstances under which hardship and loan distributions can be made from a plan to participants and beneficiaries affected by the hurricane. The announcement also eliminates the need for obtaining otherwise required documentation in advance of a hardship or participant loan distribution.

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