The CARES Act and Your Retirement Plan
Last week, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.
The Act includes several retirement plan provisions that affect you and your plan participants.
Under the new provisions, plans may offer a distribution option for qualified participants to withdraw up to $100,000 without being subject to the 10% early withdrawal penalty. In addition, plans may modify their loan policy to allow qualified participants to borrow up to the lesser of 100% of the participant's vested account balance or $100,000. Qualified participants may also delay loan repayments for up to one year, although interest will continue to accrue.
These options can be made available immediately. The Plan will need to be amended on or before the last day of the 2022 Plan Year to reflect what was done in practice.
If you would like to add the new distribution option or the extended loan options please reach out to your Account Executive to discuss. If you do not currently offer loans but would like to consider adding them, you will also want to speak with your Account Executive.
To read more about these legislative changes and how they impact your plan, please refer to our article Retirement Plan Provisions in the CARES Act.