For Individuals,For Plan Sponsors,Retirement Savings Plans,Custom

IRS Provides Additional CARES Act Plan Distribution and Loan Relief Guidance

July 2, 2020

On June 19, 2020, the Internal Revenue Service (IRS) released Notice 2020-50, which provides guidance on the Coronavirus Aid, Relief, and Economic Security (CARES) Act's retirement plan distribution and loan relief provisions.

The following are highlights:

  • Clarification that CARES Act coronavirus-related distribution (CRD), loan expansion and deferral of loan repayment provisions are optional.
  • Expansion of qualified individual definition to individuals whose spouses and members of households are impacted by COVID-19.
  • A qualified individual may designate their distribution as a CRD for tax purposes even if the plan does not offer CRD distributions. 
  • Beneficiaries may treat distributions as a CRD for tax purposes.
  • Pension plans, including money purchase plans, are still not permitted to make a CRD distribution before an otherwise permitted distributable event.
  • Repayments of CRDs within three years are permitted as rollover contributions, including by spousal beneficiaries. 
  • Safe harbor guidance is provided for a one-year delay of loan repayments.

Read a comprehensive summary prepared by ICMA-RC.

ICMA-RC is analyzing and incorporating this additional guidance into processes and procedures, and we will keep you informed of future regulatory guidance as they develop.

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