Our hearts go out to all of our clients, friends and colleagues who were affected by the tragic fires in Southern California earlier this year.
Thankfully, the IRS has announced tax relief for taxpayers who reside in, or have a business in, Los Angeles County by extending the deadline for filing returns and paying certain taxes that were due after January 7, 2025, to October 15, 2025 (IR-2025-10, January 10, 2025) including many employee benefits related filings. Taxpayers who reside outside of the disaster area may still qualify for the relief in certain circumstances: for example, if the information necessary to meet the tax or filing deadline is located in the disaster area; or the taxpayers are workers involved in relief activities through a government or philanthropic organization.
Some of the benefits related affected deadlines that fall between January 7, 2025, and October 15, 2025, are as follows:
The deadline for making contributions to IRAs and health savings accounts (“HSA”).
The 60-day deadline for making rollover contributions to an HSA, or indirect rollovers from an eligible retirement plan including an IRA.
The deadline for distributing excess deferrals made to a 401(k) plan.
The deadline to make permissive withdrawals from an eligible automatic contribution arrangement (EACA).
The deadline to distribute nondeductible contributions to a qualified plan to avoid the 10% excise tax under IRC 4972(c)(3).
The deadline to distribute excess contributions from an IRA to avoid the 6% excise tax under IRC §4973.
The deadline for filing Form 5500 series returns.
Required Minimum Distribution deadlines. For example, if the required beginning date is April 1, 2025, that first distribution may be made through October 15, 2025.
Section 331 of SECURE 2.0 permits eligible retirement plans that choose to do so to provide for
Expanded distribution options and favorable tax treatment of up to $22,000 in distributions from eligible retirement plans including IRAs. This amount also qualifies for special rollover and repayment rules.
Increased loan limit in eligible retirement plans but not IRAs to the lesser of $100,000 or 100% of the participant’s vested benefit.
Suspension of participant loan repayments for up to one year during the disaster relief period and up to 180 days thereafter.
In general, the postponement of the deadline to file and pay does not apply to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series; to Forms 1042-S, 3921, 3922 or 8027; or to employment and excise tax deposits. However, even if blanket relief is not available, penalties may often be waived in the Service’s discretion for reasonable cause.
This post is a general overview of the tax relief provisions in the event of a declared disaster and is not legal advice. Please contact us if you have questions about tax or penalty relief for a specific situation.
Boutwell Fay is a leading law firm specializing in employee benefits and ERISA.
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