Instructions for Form 8915 (2006)

General Instructions

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Purpose of Form

Use Form 8915 if you were adversely affected by Hurricane Katrina, Rita, or Wilma, and you received a distribution that qualifies for favorable tax treatment.

Part I

Use Part I to figure your:

Total distributions from all retirement plans (including IRAs),
Qualified distributions, and
Distributions, other than qualified hurricane distributions.

Parts II and III

Use Parts II and III to:

Distributions from retirement plans (other than IRAs) are reported in Part II and distributions from IRAs are reported in Part III.

Report your qualified hurricane distributions,
Report any repayments of qualified hurricane distributions, and
Figure the taxable amount, if any, of your qualified hurricane distributions.

Additional Information

See Pub. 4492, Information For Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma, for more details.

Who Must File

File Form 8915 if any of the following apply.

You received a qualified hurricane distribution from an eligible retirement plan in 2006.
You received a qualified hurricane distribution in 2005 that you are including in income in equal amounts over 3 years.
You made a repayment of a qualified hurricane distribution in 2006.

When and Where to File

File Form 8915 with your 2006 Form 1040, 1040A, or 1040NR. If you are not required to file an income tax return but are required to file Form 8915, sign Form 8915 and send it to the Internal Revenue Service at the same time and place you would otherwise file Form 1040, 1040A, or 1040NR.

How is a Qualified Hurricane Distribution Taxed?

Generally, a qualified hurricane distribution is included in your income in equal amounts over 3 years. However, if you elect, you can include the entire distribution in your income in the year of the distribution. If you received more than one distribution during the year, you must treat all distributions for that year the same way. Any repayments made before you file your return and by the due date (including extensions) reduce the amount of the distribution included in your income.

Also, qualified hurricane distributions are not subject to the additional 10% tax on early distributions.

Qualified Hurricane Distribution

A qualified hurricane distribution is any distribution you received in 2006 from an eligible retirement plan if both of the following conditions are met.

Your main home was located in a hurricane disaster area listed below on the date shown for that area.
1. August 28, 2005, for the Hurricane Katrina disaster area. For this purpose, that area includes the states of Alabama, Florida, Louisiana, and Mississippi.
2. September 23, 2005, for the Hurricane Rita disaster area. For this purpose, that area includes the states of Louisiana and Texas.
3. October 23, 2005, for the Hurricane Wilma disaster area. For this purpose, that area includes the state of Florida.
You sustained an economic loss because of Hurricane Katrina, Rita, or Wilma, and your main home was in that hurricane disaster area on the date in (1) above for that hurricane. Examples of an economic loss include, but are not limited to (a) loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; (b) loss related to displacement from your home; or (c) loss of livelihood due to temporary or permanent layoffs.

If (1) and (2) apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified hurricane distribution, regardless of whether the distribution was made on account of Hurricane Katrina, Rita, or Wilma. Qualified hurricane distributions are permitted without regard to your need or the actual amount of your economic loss.

A reduction or offset in 2006 of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified hurricane distribution. See Distribution of plan loan offsets below.

Limit. The total of your qualified hurricane distributions for 2005 and 2006 from all plans is limited to $100,000. If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose.

Eligible retirement plan. An eligible retirement plan can be any of the following.

A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan).
A qualified annuity plan.
A tax-sheltered annuity contract.
A governmental section 457 deferred compensation plan.
A traditional, SEP, SIMPLE, or Roth IRA.

Distribution of plan loan offsets. A distribution of a plan loan offset is a distribution that occurs when, under the terms of a plan, the participant's accrued benefit is reduced (offset) in order to repay a loan. A distribution of a plan loan offset amount can occur for a variety of reasons, such as when a participant terminates employment or does not comply with the terms of repayment. Plan loan offsets are treated as actual distributions and are reported on Form 1099-R, box 1.

Main home. Generally, your main home is the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home.

Additional tax. Qualified hurricane distributions are not subject to the additional 10% tax (or the 25% additional tax for certain distributions from SIMPLE IRAs) on early distributions and are not required to be reported on Form 5329. However, any distributions you received in excess of the $100,000 qualified hurricane distribution limit may be subject to the additional tax.

If you choose to treat a distribution as a qualified hurricane distribution, it is not eligible for the 20% Capital Gain Election or the 10-Year Tax Option. For information on those options, see the instructions for Form 4972.

Repayment of a Qualified Hurricane Distribution

If you choose, you can generally repay any portion of a qualified hurricane distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. Also, you can repay a qualified hurricane distribution made on account of hardship from a retirement plan. However, see Exceptions below for qualified hurricane distributions you cannot repay.

You have 3 years from the day after the date you received the distribution to make a repayment. The amount of your repayment cannot be more than the amount of the original distribution. Amounts that are repaid are treated as a qualified rollover and are not included in income. Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover.

Include on Form 8915 any repayments you make before filing your 2006 return. Any repayments you make will reduce the amount of qualified hurricane distributions reported on your return for 2006. Do not include on your 2006 Form 8915 any repayments you make later than the due date (including extensions) for filing your 2006 return. If you make a repayment in 2007 after you file your 2006 return, the repayment will reduce the amount of your qualified hurricane distributions included in income on your 2007 return, unless you are eligible to amend your 2005 or 2006 return. See Amending Form 8915 below. Also, any excess repayments you make for 2006 will be carried forward to your 2007 return or, if you choose, carried back to your 2005 return if applicable.

Also file Form 8606 to report any repayment of a nondeductible contribution to a traditional IRA on line 1 of Form 8606. If you make a repayment of a previously deductible contribution to a traditional IRA, do not file Form 8606 solely because of such repayment. If you make a repayment to a Roth IRA, see Pub. 590 to figure your basis.

Exceptions. You cannot repay the following types of distributions.

Qualified hurricane distributions received as a beneficiary (other than a surviving spouse).
Required minimum distributions.
Periodic payments (other than from an IRA) that are for:
1. A period of 10 years or more,
2. Your life or life expectancy, or
3. The joint lives or life expectancies of you and your beneficiary.

Amending Form 8915

If, after filing your original return, you make a repayment, the repayment may reduce the amount of your qualified hurricane distributions reported on that return. Depending on when a repayment is made, you may need to file an amended tax return to refigure your taxable income.

If you make a repayment by the due date of your original return (including extensions), include the repayment on your amended 2006 Form 8915.

If you make a repayment after the due date of your original return (including extensions), include the repayment on your 2007 Form 8915. However, you may file an amended Form 8915 for 2005 or 2006 if either of the following applies.

You elected to include all of your qualified hurricane distributions in income (instead of over 3 years) on your original return.
The amount of the repayment exceeds the amount of your qualified hurricane distributions that are included in income for 2007 and you choose to carry the excess back to your 2005 or 2006 tax return. See the example below.

Example. You received a qualified hurricane distribution in the amount of $90,000 on January 15, 2006. You choose to spread the $90,000 over 3 years ($30,000 in income for 2006, 2007, and 2008). On November 19, 2007, you make a repayment of $45,000. For 2007, none of the qualified hurricane distribution is included in income. The excess repayment of $15,000 ($45,000 - $30,000) can be carried back to 2006 or you can choose to carry it forward to 2008.

File Form 1040X, Amended U.S. Individual Income Tax Return, to amend a return you have already filed. Generally, Form 1040X must be filed within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever is later.