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mae1-
New Member

Can I withdraw up to $100K from my IRA in response to the Disaster Tax Relief Act of 2017. I am currently taking SEPP out of my retirement, which are penalty free?

 
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dmertz
Level 15

Can I withdraw up to $100K from my IRA in response to the Disaster Tax Relief Act of 2017. I am currently taking SEPP out of my retirement, which are penalty free?

A qualified disaster distribution is not considered to be a modification of the SEPP plan.  From IRS Pub 590-B:

Qualified disaster distributions aren’t subject to the 10% additional tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). Also, if you are receiving substantially equal periodic payments from a qualified retirement plan, the receipt of a qualified disaster distribution from that plan will not be treated as a change in those substantially equal payments merely because of the qualified disaster distribution. However, any distributions you received in excess of the $100,000 qualified disaster distribution limit may be subject to the additional tax on early distributions.

Pub 590-B:  https://www.irs.gov/publications/p590b#en_US_2017_publink100073843

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2 Replies
dmertz
Level 15

Can I withdraw up to $100K from my IRA in response to the Disaster Tax Relief Act of 2017. I am currently taking SEPP out of my retirement, which are penalty free?

A qualified disaster distribution is not considered to be a modification of the SEPP plan.  From IRS Pub 590-B:

Qualified disaster distributions aren’t subject to the 10% additional tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). Also, if you are receiving substantially equal periodic payments from a qualified retirement plan, the receipt of a qualified disaster distribution from that plan will not be treated as a change in those substantially equal payments merely because of the qualified disaster distribution. However, any distributions you received in excess of the $100,000 qualified disaster distribution limit may be subject to the additional tax on early distributions.

Pub 590-B:  https://www.irs.gov/publications/p590b#en_US_2017_publink100073843

dmertz
Level 15

Can I withdraw up to $100K from my IRA in response to the Disaster Tax Relief Act of 2017. I am currently taking SEPP out of my retirement, which are penalty free?

In TurboTax, report the same amount as eligible for the SEPP exception as you would if you receive no qualified disaster distribution.  Any additional amounts (up to $100,000 additional) would be reported as qualifying for the disaster exception.
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