The Coronavirus Aid, Relief, and Economic (CARES) Act introduced several provisions to defined contribution plan sponsors for enactment, such coronavirus related distributions and loans for eligible participants, a relaxation of loan provisions, and temporary waiver of required minimum distribution (RMD) rules for 2020. Such provisions are outlined within PEI’s previously published Special Report.
The IRS has released additional parameters for the CARES Act provisions to aid more retirement plan participants affected by the Coronavirus pandemic. More specifically, participants can qualify for relief if they or a spouse or household member are experiencing adverse financial consequences, or if they are quarantined, furloughed or laid off, working reduced hours, unable to work due to lack of child care, facing a reduction of business hours or business closure (for business owners), and/or experiencing a reduction in self-employment income resulting from effects of the Coronavirus. The IRS has clarified that employers can decide whether to implement the distribution and loan provisions made available via the CARES Act. Plan administrators can rely on an individual’s self-certification of qualification; tax treatment however would be at risk and the potential for substantial penalties if an individual is the subject of an IRS audit, and is determined to have not truly qualified.
www.planadviser.com; June 11, 2020.
www.irs.gov; June 19, 2020.