3800 / What special rules governing retirement plan distributions were implemented for 2018 and 2019 disaster areas?

The 2019 Tax Certainty and Disaster Relief Act (enacted in conjunction with the SECURE Act) extended the rules governing qualified disaster distributions from retirement accounts, discussed below, for victims of disasters that occurred in 2018 and through 60 days after enactment of the bill (December 20, 2019). With respect to this specific provision, distributions had to be made within 180 days after enactment of the law to qualify.

A 60-day extension now applies in all cases involving federally declared disasters. Under IRS rules, the 60-day extension will apply automatically (although Treasury often provides for longer extension periods). As of November 15, 2021, the changes also clarify what will happen if multiple disasters occur within the same disaster area within a 60 day period. If that's the case, a separate 60 day period will apply to each disaster declaration. The IRS has also clarified that the 60-day period will now end 60 days after the later of (1) the earliest incident date or (2) the date FEMA declares the disaster.

Qualified disaster areas generally include any area the President declares as such. The term “qualified disaster area” does not include the California wildfire disaster area, as defined in the 2018 Bipartisan Budget Act.

Planning Point: Relatedly, Section 7508A(d) was added to the Internal Revenue Code in 2019 to codify a 60-day postponement of certain tax-sensitive acts in situations involving a disaster.