Page 4 - AprDefComp

Insights for Employers

COVID-19 Latest Insights

 Qualified individual
o Eligibility for the penalty-free $100,000 withdrawal and the adjustment to the loan limits is
conditioned upon an individual meeting one of the following criteria:
 Is diagnosed with COVID-19;
 Whose spouse is diagnosed with COVID-19;
 Who experiences adverse financial consequences due to furlough, quarantine, layoff,
reduction in hours, inability to work due to lack of child care due to COVID-19, or closing
of business/reduction of hours by individual due to COVID-19; or
 Factors determined by the Secretary of the Treasury
o Importantly, the Act does not require the plan sponsor to verify whether an individual qualifies
for the COVID-19 adjusted loan limits or the $100,000 withdrawal. The plan sponsor may rely
upon a participant’s certification for eligibility.

 Required minimum distributions
o The Act waives RMD payments for 2020.
 Includes RMD attributable to 2019 which was not paid by January 1, 2020;
 Includes RMD if already made in 2020; but
 Does not include RMD distributions that were made in 2019.
o For RMDs that were already made in 2020 the participant may defer taxes and roll it back to the
plan from which it was made or roll it to another qualified plan or IRA which accepts rollovers.
Additional guidance regarding any potential impact to the 60 day rollover period is expected
from the IRS.

 Defined benefit and money purchase pension plans
o The Act allows these plans to delay any contributions due in calendar year 2020 (including all
quarterly contributions) until January 1, 2021. The new January 1, 2021 due date applies for all
quarterly contributions (they would no longer be separately due).
o Leveraging the delayed due date would subject the employer to interest on the delayed
contributions from the original due date(s) at the effective rate for the plan year that includes the
date of payment.
o Plan sponsors should expect leveraging delay should lead to higher contributions in 2021.

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