CARES Act Highights for Retirement Plan Sponsors

  1. Suspending repayment of loans participants have taken out for qualified individuals-
    • Suspension of payments can start after March 27thuntil December 31st and continue for 1 year
    • Interest will continue on the loans during that suspension
    • Loan will have to be re-amortized when they start re-payment again.
    • Loans used to be able to be suspended for leave of absences or military service- these won’t change 
  2. Take a new withdrawal out of retreatment plan- “CRD” Coronavirus Related Distribution
    • To qualify- you have to be a qualified individual (see below for criteria)
    • Plan sponsor is allowed to rely on certification of participant that they are a qualified individual
    • Participant can take up to $100,000 distribution
    • Exempt from 10% penalty
    • Has to be included in taxable income- allows taxable amount to be spread equally over 3 tax years- 20% federal tax rate does not apply as well so withholding will be at a 10% federal withholding unless participant chooses a different amount
    • Repayment is NOT required- if participant chooses to repay the amount it can be repaid within 3 years of the date of the distribution
  3. Increase in max amount of loans
    • Lesser of 100% of vested balance OR $100,000- reduced by the highest amount of a loan that participant had out over the 12 month period preceding the new loan.
  4. Suspension of RMD for 2020
    • If participants still want to receive a “normal” distribution they can still allow those. (usually at 59 1/2 the plan will allow them)
    • If participant does take a distribution it will not be considered an RMD
    • 20% withholding would apply and cannot be changed by participant if they choose to have an RMD
  5. Amendments can happen down the road- does not need to be done immediately to enact these provisions
    • Plan sponsors can operate with these provisions and amend after the fact.
    • Extended amendment date must be done on or before December 31st, 2022.
    • This extended date is only pertinent to the these changes discussed today


What is a Qualified individual? Must meet 1 of the following 3 criteria

  • Someone diagnosed with COVID-19 by a CDC approved test
  • Spouse or dependent is diagnosed with COVID-19 by a CDC approved test
  • Someone who experiences “adverse financial consequences”- due to quarantine, laid off, furloughed, work hours reduced due to the virus, unable to work due to child care due to virus.  It also covers individuals who own a business that has closed or reduced hours due to the virus.
  • Opens it up for the Secretary of Treasury to include “other” adverse financial hardships due to the virus- very vague language which may open up others to become a “qualified individual”


All provisions are optional except the RMD suspension- (RMD suspension is not a plan sponsor election)