The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress and signed by President Trump on March 27, 2020, includes a number of provisions to help retirement plan participants and employees deal with the financial fallout from the COVID-19. The package provides short-term relief for single-employer defined benefit (DB) plans by delaying all 2020 minimum required contributions until 2021 and easing benefits restrictions, among other provisions. It also makes it easier for defined contribution (DC) plan participants affected by the virus or the resulting economic downturn to access their retirement savings. Highlights of the new legislation include the following:


  • DB plans have until Jan. 1, 2021 to make any required minimum contributions originally due during the 2020 calendar year but will be required to include interest for any late payments.
  • Employers sponsoring DC plans can let participants take up to $100,000 in “coronavirus-related distributions” by Dec. 31, 2020 without paying a 10% penalty tax on withdrawals made before age 59-1/2.
  • DC plans can temporarily raise the loan limit — usually the lesser of $50,000 or 50% of the vested benefit — for affected participants. For 180 days after the bill’s enactment, affected participants can borrow up to the lesser of $100,000 or their entire vested benefit.
  • The package waives all 2020 required minimum distributions from DC plans, including initial payments to participants who turned age 70-1/2 and 2019 and did not take those RMDs in 2019.

Download the full article from Mercer’s Law & Policy Group to learn more.


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