The CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law on March 27, 2020. It allows three optional provisions, expanding the rules for loans and distributions for eligible participants. They are:

  • Penalty-free withdrawals for coronavirus-related distributions (CRDs)
  • Expanded loan provisions (Through September, 23 2020)
  • Suspension of loan repayments for eligible participants. (Interest will continue to accrue on these loans.)

The expanded loan and distribution provisions are only available to individuals who qualify. To qualify, the participants must have met one of the following conditions:

  • Be diagnosed with the coronavirus
  • Have a spouse or dependent diagnosed with the coronavirus
  • Have an adverse financial consequence due to quarantine, furlough, layoffs, reduced hours, or be unable to work due to lack of child care

If you have participants who qualify for the optional expanded loan and distribution provisions, it is up to you as the Plan Sponsor to decide if you want to allow your plan to include the provisions. If you do, please inform us and we can walk you through how to adopt the provisions and how to enact them. If your plan is allowing the expanded provisions and you have a participant who qualifies, they will need to complete a specialized COVID-19 Related form for their distribution or loan. A standard form will not be sufficient. Please contact your plan consultant for help.