COVID-19 Stimulus Package
Does anyone know if the following legislative proposals will require a Relius hotfix or complete upgrade... gulp!?
Hardship Distributions
The CARES Act waives the Code Section 72(t) additional 10% tax on early withdrawals up to $100,000 from a retirement plan or IRA for an individual who:
1. is diagnosed with COVID-19;
2. whose spouse or dependent is diagnosed with COVID-19;
3. who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or
4. other factors as determined by the Treasury Secretary.
The CARES Act permits those individuals to pay tax on the income from the distribution ratably over a three-year period and allows individuals to repay that amount tax-free back into the plan over the next three years. Those repayments would not be subject to the retirement plan contribution limits.
Plan Loans
The CARES Act doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan. Individuals with an outstanding loan from their plan with a repayment due from the date of enactment of the CARES Act through Dec. 31, 2020, can delay their loan repayment(s) for up to one year.
Plan Amendments
Retirement plans can adopt these rules immediately, even if the plan does not currently allow for hardship distributions or loans, provided the plan is amended on or before the last day of the first plan year beginning on or after Jan. 1, 2020, or later if prescribed by the Treasury Secretary.