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.