A disaster distribution, officially referred to as a Qualified Disaster Recovery Distribution (QDRD) for disasters occurring in 2021 and later, is a withdrawal from an eligible retirement plan or IRA...
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A disaster distribution, officially referred to as a Qualified Disaster Recovery Distribution (QDRD) for disasters occurring in 2021 and later, is a withdrawal from an eligible retirement plan or IRA made by an individual who has suffered an economic loss due to a federally declared major disaster.
To qualify for this type of distribution in 2025, this is the criteria:
Location: Your principal residence must be located within a qualified disaster area at any time during the disaster's official incident period.
Economic Loss: You must have sustained an economic loss because of the disaster. Examples of loss include property damage (from fire, flooding, wind, etc.), displacement from your home, or loss of livelihood due to temporary or permanent layoffs.
Federal Declaration: The event must be declared a major disaster by the President.
Timing: The distribution must generally be made on or after the first day of the incident period and before the date that is 180 days after the latest of the disaster's start date or its declaration date.
If a withdrawal is classified as a qualified disaster distribution, it receives special tax treatment:
The typical 10% early withdrawal penalty for individuals under age 59½ is waived.
You can choose to include the distribution in your taxable income equally over a three-year period (starting with the year of the distribution), or you can elect to be taxed on the full amount in the year of receipt.
You have three years from the day after you receive the distribution to repay all or part of the funds back into an eligible retirement plan or IRA. Repaid amounts are treated as tax-free rollovers.
The maximum amount you can treat as a qualified disaster recovery distribution is $22,000 per disaster.
Form 8915-F is used to report these distributions, track the three-year income spread, and report any repayments.