The Coronavirus Aid, Relief and Economic Security (CARES) Act is a $2.2 trillion emergency aid package providing significant tax and non-tax stimulus. A portion of this legislation introduces potential relief to those who are financially affected by the pandemic, which may allow them to take “Coronavirus-Related” distributions and/or loans from their retirement accounts if eligible – subject to special rules as defined by the CARES Act.

After reviewing the legislation, the following is our understanding of the important details that impact retirement plans. Some of these provisions require additional clarification from both federal and state agencies to allow record-keepers to execute. Furthermore, we expect serious challenges for many – if not all – record-keepers to execute quickly on some of the provisions in the CARES Act.

It is important to remember these items are optional; they do not have to be added. The law does not require you to add provisions – such as loans, for example – to your plan that it does not already have.

Consider extending the relief on provisions already allowed in your plan without necessarily adding features that do not already exist.


A coronavirus-related loan and/or distribution can be made to any retirement plan participant who:

  • Is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention, OR
  • Whose spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is diagnosed with such virus or disease by such a test, OR
  • Who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate).

The timing for coronavirus-related distributions begins on or after January 1, 2020 and ends on December 31, 2020.


TAX-FAVORED WITHDRAWALS from retirement plans

Distributions for eligible individuals cannot exceed $100,000 in aggregate. These distributions come with a number of unique allowances, with the most important details being:

  • A coronavirus related distribution will not be subject to the typical 10% premature distribution penalty.
  • Participants can repay up to 100% of the amount of the distribution back to their accounts at any time until three years after the date of their distribution(s).
    • Those contributions will not count against their annual plan or individual limits for any years in which they are made.
    • Any such contributions will effectively allow the participant to achieve tax-free rollover treatment. Additional guidance will be required from government agencies on how these repayments can be accomplished.
  • Participants may choose to recognize personal income for federal taxes over the three years beginning with the year the distribution would otherwise be taxable.
  • The normal 20% Federal Income Tax Withholding for distributions is not required. Participants taking the distribution should be prepared to determine if they want taxes withheld.


    coronavirus-related loans

    Eligible participants may receive the following relief related to plan loans:

    • Repayment on new or existing loans can be delayed for up to 1 year.
    • The maximum value of loans is extended to the lesser of:
      • 100% of the participant’s vested account balance (instead of 50%), OR
      • $100,000 (instead of $50,000).
    • Interest continues to accrue during this period.
    • The increased limit on coronavirus-related loans is available during the 180-day period beginning on the date of enactment of the CARES Act – so, no later than September 22, 2020. 

        REQUIREd minimum distributions

        Plans can suspend Required Minimum Distributions for 2020.


        On June 23, the Internal Revenue Service provided additional guidance in Notice 2020-51 on the waiver of 2020 required minimum distributions.  The guidance includes Q&As and sample plan amendments.


          NEXt steps

          If you want your plan to have these provisions, let your record keeper know now and they can be added and implemented immediately. The plan will need to be officially amended by the last day of the plan year beginning on or after January 1, 2022. Your record-keeper will help you with that process.

          The nature of these provisions creates a unique challenge for record-keepers, who are now scrambling to determine how they will handle these changes. Record-keepers will need to determine how to consult with their clients, make any necessary amendments to their clients’ plan documents and – perhaps the biggest challenge of all – determine how to program their systems to properly account for the complex accounting, reporting and transacting of the various facets of the Act (many of which require additional federal and/or state guidance).

          While neither Moneta nor its advisory personnel has any control over how record-keepers choose to tackle the implementation of this new law, we are available to assist our clients in understanding the changes and how they will affect their company and its participants. 

          Stay tuned. There will be more guidance on how to manage this process. You should be hearing from recordkeepers soon.

          As always, stay well and let us know if you have any questions.

          Revisit this site for updates on the latest.

          Last updated April 7th, 2020

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          You may also contact your Moneta advisor with questions or concerns.

            These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. Given the dynamic nature of the subject matter and the environment in which these materials were prepared, they are subject to change as additional legislation and government analysis come forth. This is not an offer to sell or buy securities. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.