Expanded Coronavirus Retirement Plan Relief Provisions

In late December, the most recent stimulus relief package, The Consolidated Appropriations Act, 2021, was signed into law. This annual funding package included two important updates impacting coronavirus relief for retirement plans.

Coronavirus-related Distributions (CRDs) Allowed from Money Purchase Plans

The CARES Act provides penalty-free distributions (CRDs) from most defined contribution retirement plans but did not include money purchase plans. This Act expands the ability to classify distributions as CRDs to money purchase plans. The availability of CRDs expired Dec. 31, 2020. However, individuals who had distributions from money purchase plans and were eligible for a CRD may treat those distributions as such. This treatment allows the individual to avoid any early withdrawal penalties and to potentially spread the income tax reporting of the distribution over three years.

Partial Plan Terminations

A partial plan termination occurs when total plan participants are reduced by more than 20%. The result of partial plan termination is that all employees who terminated service during the year become fully vested in all employer contributions. The Act includes a provision that if a partial plan termination occurred between March 31, 2020 to March 31, 2021 and active participants are brought back to at least 80% by March 31, 2021, the partial plan termination rule will not apply. This provision is important to employers who were forced to significantly reduce staff as a result of the pandemic but are planning to return to at least 80% by March 31, 2021. It is important to note that the partial plan termination rules do not apply to 403(b) plans.


Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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