Do we need to know NOW whether a plan allows a qualified disaster recovery distribution?

Considering a tornado’s harms to people and places in Alabama, do we need to know now whether a plan allows a qualified disaster recovery distribution?

For a provision tax law permits but does not require, remedial-amendment periods make it impractical to look to what many people call the plan document as a reliable source to discern whether the plan allows or omits the provision.

To deal with those situations, recordkeepers, third-party administrators, and other service providers use less formal writings to ask a plan’s sponsor which provisions it wants. Some of these might state an implied instruction: absent a written response, the plan’s administrator is deemed to have instructed its service provider to provide its services assuming the plan provision (or omission) the service provider’s request for an instruction specified as a presumed choice.

Some service providers might have hoped much of 2023 would elapse before it became necessary to ask for instructions about optional provisions under the SECURE 2.0 Act of 2022.

But if a service provider knows or suspects a plan’s participants could include some with one’s principal place of abode in Alabama’s Autauga and Dallas counties, should we ask the plan’s sponsor whether the plan allows a qualified disaster recovery distribution?

A plan may, following Internal Revenue Code of 1986 § 72(t)(2)(M) and 72(t)(11), provide such an early-out distribution.

The incident period began January 12.

https://www.whitehouse.gov/briefing-room/statements-releases/2023/01/15/president-joseph-r-biden-jr-approves-alabama-disaster-declaration-3/

https://www.fema.gov/disaster/4684

We had clients execute an internal Plan Administrator memorandum (and give us a copy) with the applicable effective date if they had intended to provide Coronavirus Related Distributions (CRDs) when such were available and would think similar methodology would work for this.