Practice Management
The IRS has issued a reminder concerning relief related to retirement plans provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It provides the information in a question-and-answer format.
More specifically, the IRS points out that the CARES Act, which President Trump signed into law on March 27, provides for favorable tax treatment for withdrawals from retirement plans and IRAs and makes it possible for certain retirement plans to offer expanded loan options to plan participants.
More specifically, the IRS points out that the CARES Act, which President Trump signed into law on March 27, provides for favorable tax treatment for withdrawals from retirement plans and IRAs and makes it possible for certain retirement plans to offer expanded loan options to plan participants.
Under the CARES Act, individuals eligible for coronavirus-related relief may be able to withdraw up to $100,000 from 401(k)s, 403(b)s, IRAs, profit-sharing plans or other retirement plans before Dec. 31, 2020,
Individuals eligible to take coronavirus-related withdrawals until September 22, 2020 may, if their plan allows it, borrow as much as $100,000 from a workplace retirement plan—but not from an IRA.
Plan administrators can suspend, for up to one year, plan loan repayments due on or after March 27, 2020, and before Jan. 1, 2021.
Coronavirus-related withdrawals or loans can only be made to an individual if:
- The individual is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (collectively, COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetics Act);
- The individual's spouse or dependent is diagnosed with COVID-19 by such a test; or
- The individual experiences adverse financial consequences because the individual, the individual’s spouse or a member of the individual’s household have experienced one of the following:
- quarantine
- furlough
- layoff
- reduced work hours
- inability to work due to lack of childcare
- cuts in pay or self-employment income
- having a job offer rescinded
- delayed start date for a job
- closing or reducing hours of a business they own due to COVID-19
The IRS has posted FAQs that provide additional information regarding this relief.
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