The CARES Act is complicated! Never fear, retirement plan sponsors everywhere are asking the same questions about how the CARES Act affects their retirement plan and their plan participants. As we have been talking with our clients about the CARES Act, we have found many of the sponsors are asking the same questions. We wanted to share those questions with plan sponsors everywhere in hopes this might help create some clarity about how this Act could affect retirement plans for all sponsors.
Here is the list of the questions we have compiled so far. We will continue to update our FAQ page as more questions arise.
- Do I have to offer CARES Act distributions?
- Is there a risk to the plan in offering (or not) CARES Act distributions?
- Which provisions are mandatory, and which are optional?
- How long will the provisions be in effect?
- Can we wait and add the provisions later if there is more demand/need?
- How are the Coronavirus Related Distributions (CRDs) different than regular hardships?
- If the plan doesn't offer loans now, will it be required to allow them?
- How are the CARES Act early withdrawals taxed?
- How does the participant recontribute the CRD to a qualified plan, and which qualified plans can receive the
recontribution? - Are we required to communicate this change (early withdrawals and enhanced loans) to participants similar to other plan provision changes?
- Will the vendor send out an advance notice to employees advertising the availability of CRDs?
- If a participant takes a new CARES Act loan for $100k, can they defer loan payments for a year?
To access the FAQ page with the answers to the above questions, please click the button below.
