The Coronavirus Aid, Relief, and Economic Security (CARES) Act (HR 748) was signed into law on March 27, 2020, providing support to individuals, businesses, and governments in response to COVID-19. The law includes several retirement plan and individual retirement account (IRA) provisions.

An Overview of Coronavirus-related Distributions

  • An eligible retirement plan can permit coronavirus-related distributions (CRDs) up to $100,000
    • The $100,000 limit applies to qualified plans and to qualified individuals
  • Eligible retirement plans include qualified plans, 403(b) plans, governmental 457(b) plans and IRAs (including SEPs and Simple IRAs)
  • Coronavirus-related distributions can only be made during the 2020 calendar year
    The participant or IRA owner must be a “qualified individual”
  • Plan administrator can rely on participant’s self-certification that he or she is a qualified individual
  • Coronavirus-related distributions made to an individual from any (and all) eligible retirement plans are aggregated for this purpose
  • Coronavirus-related distributions are not subject to the 10% additional income tax for early withdrawals or the 20% federal withholding. They are subject to the default withholding rate of 10%, unless elected otherwise by the participant or IRA owner
  • Applicable income taxes can be spread rateably over a 3-year period
  • Participants and IRA owners can “repay”
  • Coronavirus-related distributions to an IRA or qualified plan that accepts rollovers during a 3-year period
    • If repaid, the amounts are treated as 60-day rollovers

Who Are Qualified Individuals?

Plans have until at least the end of the 2022 plan year, or later as the Department of Treasury can provide, to adopt the amendments related to the CARES Act.

We’re Here to Help
To learn more about the CARES Act’s impact to retirement plans, IRAs, and how other provisions can help you or your business, contact one of our Employee Benefits Administrators at (320) 214-2909.