The CARES Act and Your Retirement Benefit Plans

Please note: This blog is current to the date of its publication, Thursday, April 9. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.


In addition to business loans, advance refunds and payroll protections (among many other provisions), the Coronavirus Aid, Relief and Economic Security (CARES) Act also includes numerous tax support options for qualified retirement benefit plans. These updates went into effect on Monday, April 6.

Below, SST’s experts have outlined key elements that could impact your retirement plans.

Retirement Fund Withdrawals

  • 10% early withdrawal penalties will be waived if a distribution is taken between March 27 and Dec. 31, 2020
  • Early withdrawal is limited at $100,000
  • Those eligible include:
    • Individuals and/or spouses diagnosed with COVID-19 (through a CDC-approved test)
    • Individuals experiencing adverse financial consequences as a result of COVID-19, such as layoffs, furloughs, lack of childcare, business closures or other factors determined by the Secretary of the Treasury
  • Currently, there are no relief programs available to individuals who continue to work despite a salary reduction resulting from COVID-19

Three-Year Repayment Period

  • If the individual receiving a distribution repays funds during the three-year period beginning with the distribution date, then receipt and repayment are treated as a rollover made within 60 days of the initial distribution
  • In effect, the distribution amounts are treated as non-taxable

Income Inclusion Spread

  • If an individual fails to repay a COVID-19 distribution, the amount is included as income
  • Unless otherwise indicated by the individual, the amount of the distribution can be included ratably over the three-year period beginning with the distribution date

Loans from Qualified Retirement Plans

  • The loan threshold has increased from $50,000 to $100,000
  • Individuals are eligible within 180 days from March 27, 2020, without the amount being deemed a distribution

Repayment Delays

  • Repayment of an existing loan will be delayed if the due date falls between March 27 and Dec. 31, 2020

Required Minimum Distributions

  • The CARES Act allows for a one-year delay in required minimum distributions with respect to defined contribution plans and individual retirement plans

SST knows how important retirement planning is to you, and we are here to help you navigate any questions or concerns regarding how the CARES Act could impact your future. Contact us today to connect with a trusted advisor.

Thanks to SST Partner and CEO Bill Sims for providing the content for this blog post.