Coronavirus Aid, Relief and Economic Security (CARES) Act

The CARES Act is intended to bring relief to those impacted by the coronavirus pandemic. It also has significant implications for your participants’ retirement planning. While the Act is aimed at helping participants in the short-term, be sure to understand the long-term impacts to their overall financial picture.

Temporary provisions in the CARES Act

Student loan modifications
Relief from evictions due to nonpayment of rent
Enhanced unemployment benefits
Emergency paid sick leave (originated in the Families First Coronavirus Response Act)
Expanded FMLA leave (originated in the Families First Coronavirus Response Act)

Key points about the CARES Act

The CARES Act and loans

For new and existing loans, payment due in 2020 can be deferred for one year.

This provision only applies to plans who currently allow loans and have adopted this provision of the CARES Act.

The CARES Act and retirement savings

The Act will allow for tax-favored withdrawals up to $100,000, and

The additional 10% early withdrawal tax is waived
Participants have up to three years to pay income taxes on the withdrawal
Participants can repay all or a portion of the distribution within three years; the repayments are not subject to contribution limits

The CARES Act and Required Minimum Distributions (RMDs)

The CARES Act waives RMD payments for retirement plans and IRAs due in calendar year 2020.

An extension was granted to both the SECURE and CARES Act RMD rollover periods for certain distributions from plans and IRAs until August 31, 2020. Please see the below chart regarding the new eligibility periods.

RMD Receipt Date	Can I roll over my RMD?	Rollover eligibility period
January 1, 2020 – July 2, 2020	Yes	At any point up to August 31, 2020
Beginning July 3, 2020	Yes	Within 60 days from date of receipt

Do you have questions about the specific provisions of the Act?

Read the full bill