March 22, 2021
Important Update: The Consolidated Appropriations Act of 2021
Read about this recently passed act by Congress and how it might impact your clients.
Recently, Congress passed a new Relief Act known as the Consolidated Appropriations Act of 2021 (CAA). The CAA provides relief for individuals affected by natural disasters that occurred between January 1 and December 27, 2020. A federal disaster declaration must have been declared on or before February 25, 2021 for individuals to be eligible for relief in those areas.
Under part of the CAA, participants under qualified retirement plans and IRA account holders received additional relief who were impacted by federally–declared natural disasters during 2020. The CAA does not extend last year’s CARES Act relief.
- If their annuity is classified under a Qualified Retirement Plan:
- Please refer them to contact their Plan Administrator for guidance.
- Employers have to approve the inclusion of CAA in their retirement plan, and the Plan Administrator is in the best position to know if CAA is applicable.
- Please refer them to contact their Plan Administrator for guidance.
- If their annuity is an IRA, which also includes SIMPLE IRA and Simplified Retirement Plans:
- Relief under the CAA is based on where the account holder resides or place of employment, and if that area is part of a federally-declared natural disaster.
- This determination is based on zip code of either resident or employer’s address.
- Advise the clients to check with their CPA or individual who prepares their tax return to determine if CAA is applicable in their situation.
- Relief under the CAA is based on where the account holder resides or place of employment, and if that area is part of a federally-declared natural disaster.
Note: CAA does not include Nonqualified Annuities.
If applicable, the client can complete the necessary withdrawal or loan paperwork and submit with the appropriate Plan Administrator/Third Party Administrator for approval, or if IRAs, their signature and spouses if they reside in a community property state.
The 2020 disasters eligible for relief may include:
- Alabama (Hurricane Sally, Sep 2020)
- Arkansas (Storms & Tornados, Mar 2020)
- California (Wildfires Aug 2020)
- Louisiana (Hurricane Laura, Aug 2020)
- Oregon (Wildfires, Sep 2020)
- Tennessee (Tornados, Mar 2020)
Note: For Life insurance, we have not heard of any additional relief beyond what was implemented by some states in 2020, and most have expired with the exception of DC and NJ.
