Katrina Emergency Tax Relief Act of 2005

Retirement plan distributions made before the hurricane
Bella Jones, age 35, took a $10,000 distribution from her IRA on Aug. 19, 2005, to make a down payment on her first home, located in New Orleans. The closing was supposed to be on Sept. 2, 2005. Hurricane Katrina destroyed the home and the purchase was not (and will not be) finalized. Bella has six months from Sept. 14, 2005, (the date the disaster area was declared) to recontribute the $10,000 to her IRA. If she does not recontribute the amount, it will be subject to tax and a 10 percent early distribution penalty.

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