CARES Act - Retirement Plan Provisions
Many new provisions for participants to access their vested account balances in employer-sponsored retirement plans are included in the recently enacted CARES Act. A summary of these provisions include:
- Coronavirus-related distributions up to $100,000 with repayment capability and favorable tax benefits.
- Expanded participant loan provisions with favorable repayment terms (100% up to $100,000 with deferred payments for a year).
- Relief from required 2020 minimum distributions.
Click here for more detail.
STEP ONE: Decide if you want to permit the optional Coronavirus-related distribution and loan provisions.
STEP TWO: In addition to you as the employer needing to decide whether to include the new provisions, the investment company holding the plan’s assets will need to have the capability to comply and recordkeep according to the terms you have selected. At this point, the investment community is reviewing their capabilities. This will take time, but hopefully we will all know more in a few days.
STEP THREE: Your retirement plan must be amended. However, it is our understanding the amendment itself does not need to be completed until the end of your 2022 plan year.
Participants have heard various aspects of the above from their news sources – all may not be accurate. You may wish to communicate your current position on these new provisions to your plan participants even if your communication is simply to let them know your decision is unknown or can’t be made until Step Two is known.
Your retirement plan team at SEK is constantly monitoring events and updates from many parties. As soon as we know more, further updates will be provided. For those employers not using SEK for their retirement plan services, you will want to contact your third party administrator for more information.
Thank you for your patience and understanding during these challenging times and thank you for your continued support.