Skip Navigation or Skip to Content
Employee Benefit Services

Participation and Plan Sponsor Relief under the CARES Act

Dear Valued Clients and Friends,

This communication summarizes participant and plan sponsor relief related to IRAs and qualified retirement plans as defined in Internal Revenue Code § 402(c)(8)(B), 401(a), and 403(b).

Participant Relief

Qualifying conditions for relief apply to an individual:

  • who is diagnosed with the virus via a test approved by the Centers for Disease Control and Prevention (the “CDC”);
  • whose spouse or dependent is diagnosed with the virus via a test approved by the CDC; and
  • who experiences adverse financial consequences as a result of:

– being quarantined, furloughed or laid off, or having work hours reduced;

– being unable to work due to lack of childcare;

– the closure or reduction of hours of a business owned or operated by the individual; or

– other factors as determined by the Secretary of the Treasury.

The plan may rely exclusively on a participant’s certification that he or she is a qualified individual (written or electronic).

Coronavirus-Related Distributions for Qualified Individuals

  • In-service distributions are only available for a limited time.

– In-service distributions made from 1/1/2020 through 12/31/2020 will be treated as Coronavirus-related distributions.

– Distributions are limited to $100,000 per individual and all plans of related employers are aggregated (employer can set a lower limit).

– Distributions are exempt from 10% excise tax on early distributions for those age 59½ or younger.

– Distributions are not subject to 20% mandatory withholding upon distribution.

– Distributions are includable in gross income, ratably, over three tax years, unless the participant elects to include all distributions in a single tax year.

– Eligible participants do not have to meet other distributable events under the plan (severance of employment, age 59½, etc.).

  • In-service distributions may be repaid:

– over a three-year period beginning on the day after the date the distribution is received;

– as one or more contributions to the plan totaling the original distribution amount (no earnings); or

– to an eligible retirement plan that the individual is eligible to roll over money into.

 Expansion of Plan Loans for Qualified Individuals

  • Higher Loan Limit

– For new loans made between 3/27/2020 and 9/23/2020 (180 days after CARES Act enactment), the maximum loan limit can be increased to the lesser of $100,000, or 100% of the vested account balance in the plan. The current maximum limit is the lesser of $50,000, or 50% of the vested account balance.

  • Delay of Loan Payments and Due Date

– For outstanding loans as of 3/27/2020, as well as new loans, the due date for all payments that would otherwise be due between 3/27/2020 and 12/31/2020 will be extended for one year.

– The one-year extension period is to be added to the original loan term when repayments resume, and interest continues to accrue.

– For purposes of determining the five-year maximum loan period and the term of a loan, the one-year extension period shall be disregarded.

Plan sponsors can decide if they want to implement any, or all, of the relief options described above.

Waiver of 2020 Required Minimum Distribution (RMD)

  • This relief does not apply to defined benefit/cash balance plans.
  • RMDs for the 2020 Distribution Year are waived and do not need to be distributed. If already distributed, the 2020 RMD can be rolled over to a plan that allows rollover contributions to avoid taxation of the distribution.
  • If a participant turned 70½ during 2019 and was required to receive his or her first distribution by 4/1/2020 for the 2019 Distribution Year, that distribution does not need to be made. If already distributed, the 2019 RMD paid in 2020 can be rolled over to a plan that allows rollover contributions. No relief is available for RMDs that were paid in 2019.

Employer Relief

  • Timing of Plan Amendments

– Plan sponsors may apply the new distribution and loan rules now and amend the plan document(s) later.

– Plans must be amended by the last day of the first plan year beginning on or after January 1, 2022 (or earlier, if the plan terminates).

  • Contribution Due Date Extended for Defined Benefit and Cash Balance Plan Sponsors

– Any contribution due in calendar year 2020 has a delayed due date of January 1, 2021.

– Interest must be paid on delayed contributions from the original due date to the payment date.

Additional Relief from the Internal Revenue Service

Extension of Restatement Deadlines For 403(b) and Defined Benefit Pension Plans

  • The IRS has announced that it has extended the expiration of the remedial amendment period for 403(b) plans from March 31, 2020 to June 30, 2020.
  • The remedial amendment period for the second six-year cycle for defined benefit plans (including cash balance plans), due to end on April 30, 2020, is extended to July 31, 2020.

If you have any questions, please contact your ERISA team, toll-free at 844.4WINDES (844.494.6337) or


Your ERISA Team

Therese Cheevers

Therese Cheevers, APA, ERPA
Employee Benefit Services

Lisa Carrick               Samantha Graboff

Lisa Carrick, CPA                                                                 Samantha Graboff, CPA
Senior Manager                                                                    Senior Manager
Audit & Assurance Services                                               Audit & Assurance Services                                                
Payments OnlineTaxCaddy
Secure File TransferWindes Portal