Page 3 - AprDefComp

Insights for Employers

COVID-19 Latest Insights

Updated March 30, 2020

CARES Act Legislation Summary

On March 27, 2020, the Coronavirus, Aid, Relief, and Economic Security (CARES) Act (the “Act”) was signed
into law. A portion of the Act is intended to loosen access to retirement plan funds for individuals impacted by
the COVID-19 pandemic. The following is a summary of the retirement-related provisions of the Act:

 $100,000 Withdrawal
o Waiver of 10% penalty on early withdrawals for amounts up to $100,000 from a retirement plan
or IRA taken between January 1, 2020 and December 31, 2020
o This withdrawal is only available to a qualified individual (see “qualified individual” below)
o Individuals are allowed pay the tax on withdrawal ratably over a three year period; and
o Individuals are allowed to repay the withdrawal back to the plan, tax-free, over the three years
from the date of the withdrawal (not limited by plan limits). May be repaid back into the plan
making allowing the withdrawal, another qualified plan or an IRA that accepts rollovers.
o Plan sponsor has discretion whether to offer this design in their qualified plan
 Plan loans
o Plan loan limits are increased for qualified individuals (see “qualified individual” below) to the
lesser of:
 $100,000; or
 100% of their vested account balance.
o Qualified individuals (see “qualified individual” below) with existing outstanding loans with a
repayment due from the date of enactment of the Act through December 31, 2020 may delay
loan repayments for up to one year. The plan can choose to extend the term of the loan for up
to a year as well. Doing so would allow participants to avoid a financial hardship when they do
resume repayment by keeping their repayment amount the same as prior to the suspension of
the repayment. These loans will continue to accrue interest during the period of the suspension
of repayments.
o Plan sponsor has discretion whether to offer these design elements in their qualified plan

NFP.com