California wildfires have destroyed lives, homes, and livelihoods. The extent of the destruction and costs will continue to expand. IRALOGIX extends our deepest sympathies to all who are affected and our gratitude to all who are sending aid and risking their lives to help.
It’s little consolation, but it may be helpful in the coming weeks to be aware of the retirement savings and tax relief available.
Qualified Disaster Recovery Distributions
The SECURE 2.0 Act made it easier for those affected by a federally declared disaster to access their retirement savings — with tax relief — in a disaster situation.
Those who qualify may
- Withdraw up to $22,000 from an IRA or an employer-sponsored retirement plan that allows for disaster distributions
- If a plan does not offer this distribution trigger but a participant is otherwise eligible to take a distribution, the participant can still claim the tax relief when filing their tax return.
- Claim an exemption from the additional 10% tax on early distributions (pre-age 59½)
- Spread the taxation on the disaster distribution in equal parts over three tax years
- Repay any or all of the distribution amount to an IRA or retirement plan within three years of the day after you received the distribution (and reclaim any tax paid)*
- Have increased retirement plan loan limits up to $100,000 and a one-year extension on repayment
*Required minimum distributions (RMDs) and beneficiary payments may be included in a disaster distribution for tax purposes but may not be repaid to an IRA or retirement plan.
Individuals qualify for these special distributions if their principal residence is in a major disaster area (currently Los Angeles County), and they sustained an economic loss due to that disaster. An economic loss includes
- Being displaced from a principal residence
- Loss or damage to or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other causes
- Lost income due to temporary or permanent layoff
A Qualified Disaster Recovery Distribution must be taken within 179 days after the disaster declaration. For Los Angeles County, the deadline is July 6, 2025.
Extended Deadlines for Tax Filings and IRA Contributions
The IRS has announced general tax relief for individuals that reside or have a business in Los Angeles County and are affected by wildfires and straight-line winds that began on January 7, 2025. These taxpayers now have until October 15, 2025, to file various federal tax returns and make tax payments that would otherwise have been due between January 7 and October 15, 2025:
- Individual income tax returns and payments normally due on April 15, 2025
- 2024 contributions to IRAs and health savings accounts for eligible taxpayers
- 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and estimated tax payments normally due on April 15, June 16, and Sept. 15, 2025
- Quarterly payroll and excise tax returns normally due on Jan. 31, April 30 and July 31, 2025
- Calendar-year partnership and S corporation returns normally due on March 17, 2025
- Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025
- Calendar-year tax-exempt organization returns normally due on May 15, 2025
This same relief will be available to any other counties added to the disaster area by the Federal Emergency Management Agency (FEMA).
For More information
- Current list of major disaster declarations: gov/Disaster
- IRS disaster relief by date or state: Tax relief in disaster situations
- FAQs on disaster distributions: Disaster relief FAQs: Retirement plans and IRAs under the SECURE 2.0 Act of 2022
- Details on tax-related actions qualifying for relief: assistance and resources for individuals and businesses
- IRS disaster hotline: 866-562-5227