The Bipartisan Budget Act of 2018, which was recently signed into law, includes changes that affect retirement plans. The Act provides tax relief for individuals affected by the recent California wildfires. This tax relief includes an exception to the 10% early withdrawal penalty that typically occurs when an owner withdraws funds from an IRA before reaching the age of 59 ½. Also, the Act extends relief to loans from qualified plans, including increasing the limit on the amount of the loan that can be taken.
The Act also includes a provision that allows individuals who receive a refund from an IRS levy to contribute the refunded amounts into an eligible IRA or employer plan as a rollover contribution, so long as the contribution is made by the taxpayer’s tax return due date (not including extensions) for the year in which the refund was returned.