In response to the coronavirus pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act was signed by the President on March 27, 2020. This large stimulus package includes provisions that will allow individuals impacted by the COVID-19 disease increased access to retirement savings.
The Act has raised a lot of questions from plan sponsors about the specifics of the Act’s provisions. When the Act was first enacted, we provided a fact sheet on the defined contribution retirement provisions, as well as a CARES Act FAQ we compiled while discussing the Act with our clients and hearing the questions they had about its effects on their retirement plan.
The IRS has now published its Q&A tackling questions related to coronavirus-related distributions, loans, and who is a "qualified individual" that can take advantage of these provisions. The questions they answered include:
- What are the special rules for retirement plans and IRAs in section 2202 of the CARES Act?
- Does the IRS intend to issue guidance on section 2202 of the CARES Act?
- Am I a qualified individual for purposes of section 2202 of the CARES Act?
- What is a coronavirus-related distribution?
- Do I have to pay the 10% additional tax on a coronavirus-related distribution from my retirement plan or IRA?
- When do I have to pay taxes on coronavirus-related distributions?
- May I repay a coronavirus-related distribution?
- What plan loan relief is provided under section 2202 of the CARES Act?
- Is it optional for employers to adopt the distribution and loan rules of section 2202 of the CARES Act?
- Does section 2202 of the CARES Act provide additional distribution rights to participants or otherwise change the rules applicable to plan distributions?
- May an administrator rely on an individual's certification that the individual is eligible to receive a coronavirus-related distribution?
- Is an eligible retirement plan required to accept repayment of a participant's coronavirus-related distribution?
- How do qualified individuals report coronavirus-related distributions?
- How do plans and IRAs report coronavirus-related distributions?
Click here to access the questions and answers on the IRS’ Q&A page.
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.