Congress OKs Katrina Relief Bill

- Offer employers tax credits to hire or retain workers displaced by Katrina.

- Reward taxpayers who house Katrina evacuees a $500-per-evacuee income tax exemption. Taxpayers can report a maximum of 4 evacuee housing exemptions.

H.R. 3768 was written before the evacuation for Hurricane Rita began, and it makes no direct mention of accommodations for individuals or companies affected by Rita.

The retirement plan withdrawal section states that individuals eligible for the waiver of the 10% early withdrawal penalty tax because of Katrina would be permitted to pay income tax on such distributions over a 3-year period.

Amounts distributed could be put back into a qualified retirement plan over the 3-year period following the distribution date and receive rollover treatment.

Distributions for home purchases which were not completed because of Hurricane Katrina also could be re-contributed to a qualified retirement plan or IRA.

The charitable rollover provision would exclude from gross income otherwise taxable individual retirement account withdrawals from a traditional or a Roth IRA for qualified charitable distributions. Under the provision, taxpayers who are 70.5 and older would be allowed to roll over amounts from their IRA accounts directly to a qualified charitable organization on a tax-free basis.

In addition, the rollover provision would allow taxpayers aged 59.5 and older to transfer IRA funds to a charitable remainder trust and give a remainder interest in the trust to charity without tax consequences.

Links to the final version of H.R. 3768, which was approved as H.Res. 454, are on the Web at http://thomas.loc.gov/cgi-bin/bdquery/z?d109:h.res.00454: