SECTION 3. GUIDANCE FOR

ELIGIBLE RETIREMENT PLANS MAKING, OR ACCEPTING RECONTRIBUTION OF, KATRINA DISTRIBUTIONS

This section provides guidance for eligible retirement plans ( i.e., employer retirement plans and IRAs) making, or accepting recontribution of, Katrina distributions.

A. Tax reporting on Katrina distributions.

An eligible retirement plan must report the payment of a Katrina distribution to a qualified individual on Form 1099-R, Dis- tributions From Pensions, Annuities, Re- tirement or Profit-Sharing Plans, IRAs, In- surance Contracts, etc . This reporting is required even if the qualified individual recontributes the Katrina distribution to the same eligible retirement plan in the same year. If a payor is treating the payment as a Katrina distribution and no other appropriate code applies, the payor is permitted to use distribution code 2 (early distribution, exception applies) in box 7 of Form 1099-R. However, a payor is also permitted to use distribution code 1 (early distri

2 Form 8915 is expected to be available soon.

bution, no known exception) in box 7 of Form 1099-R.

B. Reliance on representations relating to the recontribution of a Katrina distribution.

In general, a qualified individual who receives a Katrina distribution that is eligible for tax-free rollover treatment is permitted to recontribute, at any time in a 3-year period, any portion of the distribution to an eligible retirement plan that is permitted to accept eligible rollover contributions. The relief in Q&A–14 of § 1.401(a)(31)–1 of the regulations applies to an employer retirement plan accepting recontributions of Katrina distributions. In order to obtain the relief described in Q&A–14 of § 1.401(a)(31)–1, a plan administrator accepting the recontribution of a Katrina distribution must reasonably conclude that the recontribution is eligible for direct rollover treatment under section 101(c) of KETRA and that the recontribution is made in accordance with the rules under section 4.C of this notice. In making this determination, the rule in section 2.E of this notice applies. Thus, a plan administrator may rely on the reasonable representations of a qualified individual with respect to the individual’s principal place of abode on August 28, 2005, and whether the individual suffered an economic loss by reason of Hurricane Katrina, unless the plan administrator has actual knowledge to the contrary.