KETRAKatrina Emergency Tax Relief Act of 2005 (US)
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KETRA had established special rules regarding the retirement funds of individuals who lived in the Hurricane Katrina Disaster Area (see map 1) and sustained economic losses due to the storm.
KETRA removed the 10% charitable contribution deduction limitation for Hurricane Katrina cash donations made by C corporations during the period beginning August 28, 2005, through December 31, 2005.
KETRA provided that casualty losses attributable to Hurricane Katrina that occurred in the Hurricane Katrina Disaster Area on or after August 25, 2005, are fully deductible.
Under KETRA individuals affected by Hurricane Katrina could use their 2004 earned income amount to calculate the earned income tax credit and refundable child credit on their 2005 tax returns if their earned income in 2005 was less than it was in 2004.
KETRA also increases the allowable plan loan amount from an employer-sponsored retirement plan.
Under KETRA Section 103, individuals affected by Hurricane Katrina, as noted above, may be able to borrow up to $100,000 (or their entire balance, if less) from their Secs.
Under KETRA Section 102, individuals who withdrew money from their retirement plans to build or purchase a home in what is now the Hurricane Katrina disaster area may be able to redeposit those funds and not pay tax.
Under KETRA Section 103, if individuals borrowed money from their retirement plans prior to Hurricane Katrina, their loan repayment deadline may be extended a year.
Provisions of KETRA include: * Distributions from qualified retirement plans (QRPs) -- not just IRAs -- can be used for charitable purposes and any penalties are waived.
ARCBA encourages members of the public to consult their tax advisors to better understand how the provisions of KETRA may impact their individual situations.