Many deadlines for various forms of relief under the Coronavirus, Aid, Relief and Economic Security (CARES) Act have passed. But not all, and there are deadlines looming for provisions concerning loans and distributions.
Loan Repayments
The CARES Act provides that any loan repayments due between March 27, 2020, and Dec. 31, 2020, can be delayed; for example, a loan repayment that would be due in December 2020 could be extended to December 2021. Therefore, this relief—and the ability to make extensions of the repayment deadline—goes away on Dec. 31, 2020.
The CARES Act also provided that amortization schedules would be revised. In Notice 2020-50, the IRS provided guidance saying that the safe harbor method, which is not the only method, would require the loan to be re-amortized as of Jan. 1, 2021.
And in the ASPPA webcast “Just the FAQs About Distributions,” American Retirement Association Director of Technical Education Robert Kaplan reminds that if a loan is delayed, interest will accrue during the time the payments are suspended, and the loan will have to re-amortized. The safe harbor method is to calculate the interest until Dec. 31, 2020 then resume loan repayments at the new amortized rate, completing the last payment no later than six years from the date of the original loan (five years plus the one-year delay.
Distributions
Dec. 31, 2020 also is the last day that COVID-related distributions can be made under the CARES Act. That law provides that participants can take COVID-19 distributions—including multiple distributions—as long as they stay below the $100,000 maximum and the distributions are made before Dec. 31, 2020.
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