CARES Act
April 7, 2020
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
- Added three OPTIONAL retirement withdrawal/loan benefits
- Coronavirus-Related Withdrawal
- Available to those diagnosed with COVID-19, those with a spouse or dependent diagnosed with COVID-19, or those experiencing adverse financial consequences as a result of being quarantined, furloughed, laid off, reduced work hours due to the virus, unable to work due to lack of child care, closing or reducing hours of the business owned by the individual due to the virus or any other factor determined by the Treasury Secretary
- May take up to $100,000 of vested balance with no mandatory 20% Federal tax withholding and no 10% Federal early withdrawal penalty
- Available through December 31, 2020
- May be repaid or taxed over a three-year period
- Reliance on employee self-certification is allowed
- Loan Limit Increase & Extension
- Available to those diagnosed with COVID-19, those with a spouse or dependent diagnosed with COVID-19, or those experiencing adverse financial consequences as a result of being quarantined, furloughed, laid off, reduced work hours due to the virus, unable to work due to lack of child care, closing or reducing hours of the business owned by the individual due to the virus or any other factor determined by the Treasury Secretary
- Increase to the participant loan limit to the lesser of $100,000 or 100% of the participant’s vested account balance for loans taken between March 27 and September 24, 2020
- Allows the suspension of loan repayments due on outstanding loans that are in good order for a period of up to 12 months. This relief expires on December 31, 2020. The suspension period is to be added to the original loan term when repayments, including accrued interest, resume, regardless of the length of the loan’s original term.
- Waiver of Required Minimum Distribution (RMD) Requirements
- Participants normally subject to RMD requirements for 2020 may waive the withdrawal for this year
- Coronavirus-Related Withdrawal
- Plan Sponsor may implement any combination of these three new options via plan amendment and employee notification
- Plan amendment due date is the end of the 2022 plan year
- Timeline for actual availability of the new withdrawal and loan options is subject to your recordkeeping partner’s ability to implement these options in their system
- Contact your dedicated PCC administrator to discuss prior to processing any of these optional provisions for individual employees
Click here for more information (https://www.napa-net.org/coronavirus-aid-relief-and-economic-security-cares-act-faqs) »
