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Special Retirement Plan Provisions Under the CARES Act

Jul 27, 2020

Section 2202 of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) provides for special distribution options and rollover rules for retirement plans and IRAs and expands permissible loans from certain retirement plans. Section 2203 provides for relief on required minimum distributions. Key retirement plan highlights are as follows:

CARES Act Sec. 2202


  • A qualified individual may receive a coronavirus-related distribution up to $100,000, not to exceed participant vested account balance.
  • The distribution so received shall not be subject to 10% withdrawal penalty.
  • The distribution can be taken from the plan January 1, 2020, through December 31, 2020.
  • Distributions generally are included in income over a three-year period, with the option of including the entire amount in the year of distribution.
  • Distributions generally may be repaid in part or in full within a period of three years from the date on which the first distribution was made. If repaid, the distribution is not taxable.


  • There is an increase in the loan limit to $100,000—an increase from $50,000 allowed under section 72(p)(2) of the IRC—not to exceed the individuals vested benefit for plan loans made to qualified individuals from March 27, 2020, to September 23, 2020.
  • The repayment of existing loans can be delayed up to one year for all eligible participants, with loan repayments due between March 27, 2020, and December 31, 2020.
  • Interest on the outstanding loans will continue to accrue. Any subsequent repayments can be appropriately adjusted to reflect the delay in repayments.

CARES Act Sec 2203

Required Minimum Distributions:

  • The required minimum distributions (“RMDs”) have been temporarily suspended for 2020. This shall apply to all the RMDs at age 72 required to be made in 2020 and also include any individual who turned age 70 ½ in 2019 and would have had to take the first RMD by April 1, 2020.
  • The IRS has issued notice 2020-51, dated June 23, 2020, “Guidance on Waiver of 2020 Required Minimum Distributions,” which states that anyone who already took an RMD in 2020 can roll that amount back into the retirement account following the CARES Act 2020 RMD waiver. The 60-day rollover period has been extended to August 31, 2020.

Amendments and Key Dates:

  • The CARES Act states that plan amendments are required to be made no later than the last day of the plan year beginning on or after January 1, 2022, (i.e., by December 31, 2022, for calendar year plans). For governmental plans, this amendment deadline is extended by two years (i.e., by December 31, 2024, for calendar-year governmental plans).
  • The plan sponsors are permitted to choose whether, and to what extent, they want to amend their plans for coronavirus-related distributions and/or loans that satisfy the provisions of the CARES Act.
  • Plan sponsors should carefully go through the provisions of the CARES Act and work with their record-keepers to amend their plans and provide the relief provisions of the CARES Act to plan participants.

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