On Friday, November 16, the U.S. Department of Labor issued Announcement 2012-44 to coincide with IRS IR-2012-83 clarifying relief for those affected by Hurricane Sandy.

Relief has been provided for qualified plans that grant loan or hardship distributions due to damage to principal residences located in the areas affected by Hurricane Sandy on October 26, 2012. Plans that do not currently allow for hardship distributions may immediately allow for them as a result of Sandy but these plans must be amended to provide for hardship distributions by the end of the first plan year beginning after December 31, 2012. For example, if your plan year begins January 1, 2013, the deadline to file the amendment is December 31, 2013.

Recordkeepers, for distribution purposes, will rely on participants to provide proof of hardship from unforeseeable emergency, and the allowable amount for hardship is limited to the maximum available. While these hardships will not require the participant to be held to the six-month suspension period following a hardship distribution, any that are intended to fall under this relief period must be distributed on or after October 26, 2012, and no later than February 1, 2013.

For more information on eligible localities and other relief provided, please visit this IRS website.