Victims of the flooding in Louisiana will be allowed to takeloans and receive hardship distributions from 401(k) and similarretirement plans, under new guidance from the Internal Revenue Serviceand the U.S.Department of Labor.

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Participants in 401(k) plans, employees of public schools andtax-exempt organizations with 403(b) tax-sheltered annuities, aswell as state and local government employees with 457(b)deferred-compensation plans, may be eligible to access the money inthose plans under streamlined loan procedures and liberalizedhardship distribution rules.

In addition, although IRA participants are barred from takingout loans, they may be eligible to receive distributions underliberalized procedures.

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Also, the Labor Department said that plans will be allowed tomake loans or hardship distributions before the plan is formallyamended to provide for such features. Plans can also ignore thereasons that normally apply to hardship distributions, so that theycan be used for food and shelter. If a plan requires certaindocumentation before a distribution is made, the plan can relaxthis requirement in accordance with provided guidance.

Plans making disaster-related loans or hardship distributionsnot authorized by their plan documents must be amended by the endof the first plan year beginning after December 31, 2016.

The Labor Department also said it will not treat any person ashaving violated Title I of Employee Retirement Income Security Actsolely because of complying with the IRS relief provisions, and ithas also provided guidance regarding delinquent contributions andblackout notices.

Employees and certain members of their families who live or workin the disaster area must qualify for this relief by makinghardship withdrawals by Jan. 17, 2017.

The IRS said that it is also relaxing procedural andadministrative rules that normally apply to retirement plan loansand hardship distributions. That should allow eligible retirementplan participants to access their money more quickly. In addition,the six-month ban on 401(k) and 403(b) contributions that normallyaffects employees who take hardship distributions will notapply.

Under the new guidance, not only can a Louisiana flood victimtake a hardship distribution or borrow up to the specifiedstatutory limits from their retirement plan, a person who livesoutside the disaster area can take out a retirement plan loan orhardship distribution and use it to assist a son, daughter, parent,grandparent or other dependent who lived or worked in the disasterarea.

The Labor Department said that hardship distributions will betaxable, and generally subject to the 10 percent early distributionpenalty.