Section 2202. Tax Favored Withdrawals from Retirement Plans
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows participants to receive up to a $100,000 distribution from qualified retirement plans for COVID-19-related purposes. The distribution must be made in the 2020 calendar year and must be for “coronavirus-related reasons”.
Eligible participants are as follows:
- An individual who is diagnosed with the virus SARS-CoV-2 or the COVID-19 by a test approved by the Centers for Disease Control, or
- An individual whose spouse or dependent is diagnosed with such virus by such test, or
- An individual who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, or reduced work hours due to such virus, or
- An individual being unable to work due to lack of child care due to the virus, or
- An individual who owns a business and had to close or reduce hours due to such virus.
Loans from Qualified Retirement Plans
Participants who qualify for a COVID-19 distribution as described above also qualify for increased loan amounts. The maximum loan amount from a qualified plan is increased from $50,000 to $100,000 for a period of 180 days after the enactment of the CARES Act. The maximum loan available is the current participant’s vested account value (or $100,000 whichever amount is less).
In addition, plan loan payments may be extended for one year, if the payment due date is after the CARES Act was enacted, but before the end of 2020. Any subsequent loan repayments, (including interest accrued during the plan loan extension), must be appropriately adjusted to reflect the extension in the loan’s due date.
Section 2203. Temporary Waiver of Required Minimum Distribution (RMD) Rules
Required Minimum Distribution (RMD) rules will be waived for qualified retirement plans and IRAs for the 2020 calendar year. This waiver will also apply to RMDs for the 2019 distribution calendar year for individuals who have not yet made their initial RMD which would normally be due on April 1, 2020.
Questions? Contact one of our Employee Benefits Administrators at (320) 214-2909.
