Plan Loan Amounts Increased

In addition to relaxed distribution rules, Katrina victims may also borrow up to a maximum of $100,000 from their qualified pension plan. Loans must be made on or after September 23, 2005 and before January 1, 2007. Also, repayment schedules for loans outstanding after August 25, 2005 with a required payment due date between August 25 and December 31, 2006 will have the due date extended for one year. Future repayment schedules will also be adjusted for the five year and level payment requirements.

In addition, documentation rules for loans made to Katrina victims have been relaxed. Normally, a plan would have to be amended to allow for the additional loan amounts and repayment schedules. However, the IRS is allowing plans to make the loans and revised payment schedules without waiting for authorization.

From December 2005

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