Legislative Updates, CARES Act of 2020

Scott Campbell |
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CARES Act is the stimulus legislation passed to address the economic damage created by the shutdown of the country to deal with the Coronavirus.  The CARES Act creates a new emergency retirement plan distribution, changes loans and required minimum distributions.

A new emergency distribution called the Coronavirus Related Distribution, (CRD):

  • a CRD in any amount up to $100,000 can be withdrawn from an employer sponsored retirement plan such as a 401(k), 403(b), or IRA. 
  • IRS 10% early withdrawal penalty is waived.
  • individual taking the CRD can spread the reported income over three years for tax purposes.
  • CRD can be repaid within three years to avoid taxation.
  • participants self-certify that they either have contracted the COVID-19 virus, that a spouse or dependent has, or that they have lost a job or been furloughed or suffered a heavy financial burden because of the coronavirus.

401(k) plan loans:

  • the maximum loan amount has increases from $50,000 to $100,000.
  • loan term can be extended one additional year for new and existing loans.

Required Minimum Distributions are waived for 2020.

 

 

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