Congress passed The CARES Act, and late Friday (March 27th), the President signed it into law. Below are key provisions that may benefit some of your participants:
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A new emergency distribution option from plan balances is allowed, the “coronavirus related distribution (CRD).” A CRD can be drawn in any amount up to $100,000. Key terms:
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10% penalty tax on early plan distributions is waived.
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Individual taking a CRD can spread the reported income over three years for tax purposes.
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The distribution can be repaid within three years to avoid taxation.
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Participants must self-certify that they either have COVID-19, that a spouse or dependent has COVID-19, or that they have lost a job/been furloughed/have reduced hours because of the coronavirus pandemic.
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The maximum allowable loan amount was increased from $50,000 to $100,000.
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RMDs are waived for 2020.
