COVID-19 Update: IRS Issues Guidance on Coronavirus-Related Distributions and Plan Loans Under the CARES ActJune 24, 2020
The IRS recently issued IRS Notice 2020-50 (“Notice 2020-50”) which provides guidance for retirement plan sponsors and administrators, as well as to individuals, relating to the application of coronavirus-related distributions and certain relief relating to plan loans that are available to qualified individuals under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Importantly, the guidance clarifies several key points impacting the administration of employer retirement plans under the CARES Act.
As described in more detail in our prior alert (available here), Section 2202 of the CARES Act allows certain retirement plans to permit coronavirus-related distributions (“CRDs”), to increase the maximum allowable loan amount for loans taken between March 27, 2020 and September 22, 2020, and to suspend loan repayments for the remainder of calendar year 2020. Generally, only “qualified individuals” (as defined below) are eligible to designate certain distributions as CRDs and eligible to take advantage of the plan loan relief (to the extent permitted by the plan).
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