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Updated as of 6/23/20

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has been signed into law. The purpose of the act is to provide relief to America’s families and businesses as quickly as possible. Below we’ve outlined the pertinent retirement plan related provisions. Any related amendments to your Plan document will need to be completed by 12/31/2022.* Please note that your provider will uniquely determine their process for implementing these provisions. Please stay in communication with your plan provider to be informed of their unique process.

Required Minimum Distributions (RMD’s)

All RMD’s for the remaining 2020 calendar year are waived. Participants of RMD age (Those turning 72 or older in 2020) may still take distributions, but the distribution will not be coded as an RMD. RMD’s will resume as of 1/1/2021. An additional year is added to the beneficiary 5-year RMD rule.

The following provisions are permitted for qualifying individuals from 3/27/2020 through 12/31/2020. A qualifying individual is someone who has experienced one or more of the following:

  1. Personally diagnosed with SARS-CoV-2 or COVID-19
  2. A spouse or dependent diagnosed with SARS-CoV-2 or COVID-19
  3. Financial hardship due to lack of employment and/or childcare, furlough, or quarantine.

Plan Sponsors are not required to adopt the following provisions and may choose to rely on the hardship, distribution, and loan provisions already in place, as applicable.

Withdrawals

A withdrawal requested by a qualified individual:

  • The 10% excise tax is not applicable.
  • Standard 20% Federal withholding is reduced to 10% withholding or less.
  • Income taxes for the distribution can be paid back over the 3 tax years following the year of the distribution.
  • Can withdraw up to $100,000.
  • Has the option to pay back the distribution amount within 3 years (for plans allowing rollovers), without regard to contribution limits.
  • Is self-certified that they are adversely affected by COVID-19, not certified by their employer.

Loans

For Plans that currently allow loans, a qualified individual:

  • That had an outstanding loan between 3/27/2020 and 1/1/2021 can delay repayments for one year following the repayment due date. Interest keeps accruing during the delayed period and the loan will be re-amortized upon restarting payments to include the accrued interest. E.g. a loan repayment due on July 7th 2020 can be delayed until July 7th
  • Can request a new loan for the lesser of 100% of the vested balance or $100,000, less any currently outstanding loan balances, for the 180 days following 3/27/2020, or up until 9/23/2020.

*Conditions apply for government plans.