Coronavirus Distributions - Info for Plan Participants and Sponsors

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed and signed into law on March 27.  The retirement provisions included in CARES are optional for employers to adopt.  This blog outlines some of the basics for you to review, but we encourage you to reach out to us or your financial service providers to discuss the best decisions for your particular situation. 



First and foremost, to qualify for relief from the expanded access the CARES Act provides to retirement plan participants, you must have been affected by one or more of the following conditions:

  • You or your spouse have been diagnosed with the virus as confirmed by a CDC-approved test
  • You or another in your household have suffered financially from the pandemic because:
    • You were laid off, furloughed, quarantined, or had hours reduced
    • You can’t work due to the unavailability of childcare during the pandemic
    • Your company had to close
    • You've had a job offer taken off the table or your expected start date has been delayed
    • Other reason as outlined by the Treasury Department (in the future)



  • Through December 31, 2020, distributions of up to $100,000 may be allowed for any qualified individual as a hardship distribution.  Qualified individuals may self-certify their status and must keep proof for at least three years in the event it is requested by your employer.  Employers should retain these self-certification statements throughout the life of the plan, similar to any hardship distribution, in case your plan is ever subject to IRS or DOL audit.

    NOTE: These distributions are currently available only for Defined Contribution plans like 401(k) and 403(b).  Pension plans, including Cash Balance plans, do not offer in-service distributions prior to Normal Retirement Age but IRS guidance is expected soon which may modify this rule.


    • The 10% Federal premature distribution tax penalty will not be applied
    • Regular income taxes will apply but may be spread over a 3-year period
    • Income tax withholding on the distribution is optional.  Withholding of 10% will apply unless you complete and return a Form W-4P to elect out of withholding.
    • Any portion of these distributions may be repaid to the plan or rolled to any other plan within a 3-year period.  The rollover does not need to be adjusted by investment earnings.



  • Available through September 23, 2020 for Qualified Individuals
  • Limits have been increased to up to 100% of your vested account balance or $100,000 (up from 50% vested or $50,000
  • Payments due between March 27 and December 31, 2020 on any previously existing outstanding loan may be delayed up to one year.  However, interest will accrue during that period.  The five-year repayment period will also be extended for one year.



  • Required minimum distributions due in 2020 are not required from Defined Contribution plans, 403(b), IRAs, or governmental 457(b) plans. They are NOT waived for Defined Benefit plans which include Cash Balance plans.
  • This waiver includes 2019 RMDs that were delayed until April 1, 2020. If an RMD for 2019 was already processed, it may be rolled back into the plan or rolled to IRA within 60-days or before July 15, 2020.
  • RMDs for 2021 will be based on values at December 31, 2020.
  • RMDs due to death that are being paid over the five-year maximum distribution period will disregard 2020.


    • If you were born after June 30, 1949, your RMD may be delayed until the end of the calendar year in which you attain age 72.
    • The first distribution may be taken on December 31 of the year you attain age 72 or pushed until April 1 of the following year, but is still based on the balance in your account as of the end of the year in which you attained age 71.  If you delay a distribution until April 1 you will still need to take your second distribution by December 31 of that same year.  Essentially, then, you will have two distributions that first year.
      • Example:
        If your birth date is 9/17/1949, then your:
        • First RMD is based on the account balance at 12/31/2020
        • First RMD may be made by 12/31/2021 or pushed to 4/1/2022
        • Second RMD is based on the account balance at 12/31/2021
        • Second RMD must be made by 12/31/2022


At Benefit Resources, we care deeply for the financial stability of our plan participants both in these immediate times of crisis but also later upon their retirement.  While the CARES Act allows unprecedented access to the retirement plans of Americans, it's very important this access is not abused in order to facilitate their comfortable retirement when the time comes.  Benefit Resources is here to help during these unprecedented times.  If you have any questions, feel free to comment or contact us at your convenience.

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