When disaster strikes, the last thing anyone wants to worry about is how to cover expenses. The SECURE 2.0 Act of 2022 added new, ongoing disaster relief rules that make it easier for people in federally declared disaster areas to access their retirement savings without heavy penalties.
In May 2024, the IRS released Fact Sheet FS-2024-19 to answer common questions about these rules. Here’s what you should know if you’ve been affected by a major disaster.
What Changed
Before SECURE 2.0, Congress had to pass separate relief laws for each disaster. Now, there’s a standing framework that automatically applies when the President declares a major disaster.
- If you qualify, you may be able to:
- Withdraw up to $22,000 from retirement accounts without the 10% early withdrawal penalty
- Spread the income taxes on that withdrawal over three years
- Repay the distribution within three years to avoid taxes entirely
- Repay home purchase distributions that weren’t used because of a disaster
- Delay loan repayments or borrow more from your plan (if your employer allows it)
Who Qualifies
You may be eligible if:
- Your primary residence was in the declared disaster area during the incident period
- You sustained an economic loss due to that disaster
Economic losses can include:
- Damage to your home, property, or business
- Temporary or permanent job loss
- Forced relocation or loss of access to your residence
You can verify if your area qualifies by checking FEMA’s website for Major Disaster Declarations.
How the Disaster Relief Works
1. Qualified Disaster Recovery Distributions
If you meet the criteria, you can withdraw up to $22,000 from eligible retirement accounts (like 401(k)s, 403(b)s, or IRAs).
- No 10% penalty on early withdrawals
- Taxable over three years (or all at once, if you prefer)
- Can be repaid within three years to avoid the tax altogether
Even if your employer’s plan doesn’t officially label your withdrawal as a disaster recovery distribution, you can still treat it as one on your individual tax return using IRS Form 8915-F.
2. Relief for Home Purchase Distributions
If you took a first-time homebuyer IRA withdrawal or a hardship withdrawal from a 401(k) or 403(b) to buy or build a home in the disaster area but couldn’t complete the purchase due to the disaster, you can now repay that amount.
- You have until 180 days after the latest of three key dates (December 29, 2022; the start of the disaster; or the date of the official declaration) to repay.
- Repayment avoids taxes and is treated as if it were a rollover contribution.
3. Special Rules for Plan Loans
If your employer allows loans from retirement accounts, you may qualify for two additional relief options:
- Extended repayment time: Loan payments due during the disaster and the 180 days following can be delayed for up to one year.
- Higher loan limits: Instead of the usual 50% or $50,000 maximum, you can borrow up to 100% of your vested balance, capped at $100,000.
Tax Reporting and Forms
If you take a disaster recovery distribution:
- Your plan will issue a Form 1099-R, even if you repay the funds later.
- You must file Form 8915-F to report the withdrawal, choose whether to spread the income over three years, and track any repayments.
- If you repay funds, you can amend prior returns (using Form 1040-X) to recover taxes already paid.
Key Takeaways
- You can withdraw up to $22,000 from retirement savings without penalties if you’re in a declared disaster area.
- You can spread taxes over three years or repay the funds to avoid taxes altogether.
- Employers may choose whether to adopt these rules, but individuals can still self-apply if eligible.
- Disaster relief rules also cover home purchase repayments and retirement plan loans.
- Always document your losses and consult a tax professional before filing.
What to Do Next
If you’ve been affected by a disaster:
- Check FEMA’s list of federally declared disasters.
- Contact your plan administrator to see what relief options are available.
- Decide early whether you want to spread the taxes or repay the funds.
- Keep good records of the withdrawal, repayment, and disaster impact.
- Talk to a professional to make sure your plan fits within your broader retirement strategy.
Disasters can cause financial strain, but the SECURE 2.0 Act offers real flexibility to help affected individuals recover without derailing their retirement plans.
At Gregory Ricks & Associates, we help clients understand these changing rules and make informed financial decisions in uncertain times. Schedule a free, no-obligation 15-minute consultation by phone or Zoom today by clicking the button below.
The free consultation provides an overview of products and services offered by Gregory Ricks & Associates. Investment advisory services made available through AE Wealth Management, LLC, a Registered Investment Adviser, and there is no obligation. This article summarizes IRS and SECURE 2.0 rules as of October 2025. Regulations and relief provisions are subject to change; check with the IRS, FEMA, or your plan administrator for the latest updates. This article is meant to be general and is not investment or financial advice or a recommendation of any kind. Please consult your financial advisor before making financial decisions. For more detailed information, contact a financial advisor with Gregory Ricks & Associates, Inc. Investment advisory products and services through AE Wealth Management, LLC. (AEWM) Insurance products are offered through the insurance business Gregory Ricks & Associates, Inc. AEWM does not offer insurance products. The insurance products offered by Gregory Ricks & Associates, Inc. are not subject to Investment Adviser requirements. Firm does not offer tax or legal advice. 3421959 – 10/25