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Art, if you are willing to email me at roy@mrhsa.com, I would be happy to help you get some answers before you reach out to banking regulators or the CFPB. I am a consultant to the American Bankers Association HSA Council and may be able to help you get this resolved pro bono.

. A qualified individual is defined as a person who: · Had his or her principal residence in the qualified disaster area during the disaster incident period; and · Sustained an economic loss by reason of the qualified disaster. A qualified disaster is defined as one that has been declared as a major disaster by the President of the United States under the Robert T. Stafford Disaster Relief and Emergency Assistance Act after December 27, 2020. The IRS recommends using the search tool on the Federal Emergency Management Agency (FEMA) website to determine whether an event has been declared a major disaster and the specific area affected.[1] In addition, the FEMA website will also set forth the incident period during which the disaster occurred. [1] FEMA Disasters Search Tool, available at https://www.fema.gov/disaster/declarations From an article I wrote for a Nova newsletter.

I'll admit, I haven't kept up with all of the fine print in the IRS regs ... but would it be permissible for the amendment to name a specific disaster? or limit distributions to a specific time frame? That way it's self-limiting from the outset -- and if the employer later decides to be more generous (e.g., add another disaster, or remove that limitation entirely), there's no cutback issue. Not sure any of that would be possible in a prototype plan, though ...

We typically don't see this if the plan has been terminated for a while. Usually when amounts do appear well after the termination and final reporting of the plan, the amounts are attributable to a settlement of litigation. It would be absurd to resurrect the plan, update for recent legislation, pass around some pennies, make payments, amend the prior final 5500, prepare a few more 5500s for the intervening years and file another final 5500, send SAR to participants, ... Let's get real and not overthink it. The trustees or plan sponsor should ask the brokerage firm to close the account and write off the amount. If the brokerage firm adamantly refuses, then one of the former service providers likely will be willing to send an invoice to the brokerage firm to close out the account.

Not a direct answer, but major disasters apply to both individual and public assistance declarations: https://www.irs.gov/businesses/small-businesses-self-employed/disaster-assistance-and-emergency-relief-for-individuals-and-businesses. In this link, the IRS defines major disaster declarations as follows: Major disaster declarations Individual assistance declarations provide assistance to individuals and households. Public assistance declarations provide assistance to state, tribal and local governments and certain private nonprofit organizations for emergency work and the repair or replacement of disaster-damaged facilities. But if you look at underlying legislation concerning disasters, the definition of "qualified disaster zone" is problematic because it seems to indicate what the OP was thinking - individual assistance is necessary. For example, under the 2020 Tax Relief Act, the term “qualified disaster zone” means that portion of any qualified disaster area which was determined by the President . . . to warrant individual or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of the qualified disaster with respect to such disaster area. As always, it would be nice to have IRS guidance that is on point.

In the absence of any specific guidance, I do not think a plan administrator can be faulted for relying on the plain language of the law. My recollection is also that past disaster relief declarations have been for areas designated for individual assistance, but that does not appear to be the case for QDRDs.

The only guidance the IRS has published on this, as far as I am aware, is this FAQ: https://www.irs.gov/newsroom/disaster-relief-frequent-asked-questions-retirement-plans-and-iras-under-the-secure-20-act-of-2022 It doesn't say that a disaster has to be designated for individual assistance, only that it must be declared a "major disaster." Q5. What is a qualified disaster? A5. A qualified disaster is any disaster with respect to which a major disaster has been declared by the President after Dec. 27, 2020 (the date of enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020). Use the FEMA disaster declaration search tool, filtering for declaration type: Major Disaster Declaration, to determine if a specific disaster qualifies. Note that, on occasion, the disaster declaration type identified by FEMA may change if new information becomes available regarding the severity of impact of the event on individuals and businesses. For example, a disaster may initially be declared to be an “emergency” but may subsequently be declared to be a “major disaster.” The relief provided under SECURE 2.0 only applies in the case of declared major disasters.