Please note: This blog is current to the date of its publication, Tuesday, Oct. 20. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.
The Coronavirus Aid, Relief and Economic Security (CARES) Act included many provisions to help individuals, small businesses and more, including several relief options to benefit 401(k) plan participants. Below, SST audit supervisor Chris Adams shares an overview of employee benefit plan updates:
- Participants that were diagnosed with COVID-19, have a spouse or dependent that has been diagnosed, or have experienced adverse financial consequences as a result of being quarantined, furloughed or laid off, are eligible to take up to $100,000 in distributions from the plan (not to exceed the participant’s account balance). The distributions have special provisions, including the 10% early withdrawal fee will not apply even if the participant is below 59 ½ years old, and the withdrawal is taxed pro rata over a three-year period (2020 – 2022).
- Participant loan limits were increased from the lesser of $50,000 or 50% of the participant’s account balance to the lesser of $100,000 or 100% of the participant’s account balance. This was in effect for loans taken between March 27, 2020 and Sept. 22, 2020.
- Payments on participant loans that were due between March 27, 2020 through December 31, 2020 can be suspended for one year.
- Required minimum distributions, which are required annually by individuals who are age 72 or older, are suspended for 2020.
For more information on the CARES Act and employee benefit plans, contact Chris today at firstname.lastname@example.org. Our team of specialized auditors are equipped and prepared serve you and your organization.