Using Retirement Plans Under CARES Act

Updated: Apr 24

On March 27, 2020, the CARES Act was enacted to help individuals who are impacted by the effects of the COVID-19 virus. There are several provisions designed to help retirement plan participants.


Corona Virus Related Loans

From March 27, 2020 through September 23, 2020 the maximum loan amount has increased to the lesser of 100% of the account balance or $100,000. In order to qualify for the increase loan the participant must:


  • Be diagnosed or have a spouse or dependent diagnosed with COVID-19 by a CDC approved test

  • Suffer financially due to layoff, furlough, quarantine or reduced work hours from the pandemic

  • Be unable to work due to lack of childcare as a result f the pandemic

  • Be formerly employed by a business which closed or reduced operating hours


If eligible, the following conditions apply:


  • The loan is reduced by the greater of the highest outstanding loan balance during the 1-year period ending on the date before the date on which the loan is made

  • OR the plan’s outstanding loan balance on the date in which the loan is made


In addition to increased borrowing limits, repayment for current outstanding loan payments from March 27, 2020 through December 31, 2020 may be suspended for up to 12 months as long as payments are current. Interest will continue to accrue during the suspension.


Corona Virus Related Distributions (CRD)s

Plan sponsors can offer penalty-free in-service withdrawals to eligible participants. These CRDs are only applicable to 401(k)s, 403(b)s, 457(b)s and IRAs. Plan sponsors are not required to certify eligibility, but the participant will need to be able to provide proof. In order to qualify the participant must:


  • Be diagnosed or have a spouse or dependent diagnosed with COVID-19 by a CDC approved test

  • Suffer financially due to layoff, furlough, quarantine or reduced work hours from the pandemic

  • Be unable to work due to lack of childcare as a result f the pandemic

  • Be formerly employed by a business which closed or reduced operating hours


If eligible a participant will receive:


  • The lesser of a distribution of up to $100,000 or 100% of their (aggregate) vested account balances

  • Exemption from the 10% excise tax (ordinary income tax would apply but withholding is optional)

  • The ability to defer income tax payment over a 3-year period

  • Ability to treat withdrawal as qualified rollover if repayments to a qualified plan are made within 3-year period


Required Minimum Distributions (RMD)s

RMDs due in 2020 are not required to be made from 401(k), profit-sharing, 403(b), 457(b) or IRA retirement plans. This includes 2019 RMDs which were due by April 1, 2020 and RMD payments to be made by December 31, 2020. Any RMD that was previously distributed in 2020 is eligible to be rolled over.


The COVID-19 situation continues to evolve and change rapidly. This information is current as of the date of publication, but please continue to stay in contact with us regarding any questions you have.


To download a copy of this article click HERE.



8 1 6 . 9 6 9 . 9 2 3 4 | INFO@ R I S E B U S C O N S U L T A N T S . C O M




Disclaimer and Liability Limitations: Every effort has been made to provide you with the most accurate and current information on this subject matter as possible. The information provided should not be relied upon as the final source, since the information may have changed prior to time of use. The contents of this document are not intended to provide legal advice, nor is RISE Consulting, LLC engaged in rendering legal advice. If legal advice is required, the services of a legal professional should be sought. RISE Consulting, LLC, has endeavored to ensure accurate information has been conveyed in this employment tool and is not liable for any error or omission, or for any legal claims or damages that are beyond its control or are the result of actions for which it is not directly involved. Advisory services are offered by RISE Consulting, LLC, a Registered Investment Advisor in the States of Kansas and Missouri. Insurance services are offered by RISE Agency, LLC. RISE Consulting, LLC and RISE Agency, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency and are not engaged in the practice of law.

SCHEDULING

Please contact us for in-person meetings. To schedule a phone consultation with one of our experts, please select a link below: 

CONTACT

9300 W 110th Street

Building 55 Ste 620

Overland Park, KS 66210

PH | 816.969.9234

 

1308 NE Windsor Dr.

Lee's Summit, MO 64086

PH | 816.888.8850

 

  • Facebook

All written content on this site is for information purposes only. Opinions expressed herein are solely those of RISE Consulting, LLC and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Advisory services are offered by RISE Consulting, LLC a Registered Investment Advisor in the States of Kansas and Missouri. RISE Consulting, LLC may only transact business with residents of those states, or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements.  Insurance services are offered by RISE Agency, LLC, an affiliated company. RISE Consulting, LLC and RISE Agency, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency, and are not engaged in the practice of law. Click HERE to view RISE's current ADV.

 

The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the States of Kansas, Missouri or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.

 

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former Clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

© 2019 by RISE Consulting, LLC