Page 144 - AugDefComp

Public Sector Retirement

News & Views | Q3 2020

CARES ACT

In late March, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. NFP advisors have been in
communication with plan sponsors to review the retirement-related provisions of the Act and options for defined contribution
plans. Briefly, the provisions are:

1. Allowing withdrawals up to $100,000 for qualified individuals, with the option for the participant to pay the withdrawal back or
to pay tax over a three-year period.

2. Increasing plan loan limits to $100,000 or 100% of their account, whichever is less.
3. Allowing qualified individuals with existing loans to delay loan repayment for up to one year.

4. Waiving required minimum distributions (RMD) for 2020.

It is important to note that, except for the RMD waiver, all the provisions are optional for plans to implement and are offered to
qualified individuals only. The definition of qualified individual was initially very strict, but in IRS Notice 2020-50 the definition was
relaxed. To be considered a qualified individual under the revised / current definition, a qualified individual includes:

• a participant, spouse or dependent who has been diagnosed with COVID-19;

• a participant who has experienced COVID-19-related adverse financial consequences as a result of any of the following situations
occurring to the participant, their spouse, or a household member:

• being quarantined, laid off, furloughed or having work hours reduced;

• being unable to work due to a lack of childcare;