The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted on March 27, 2020 included several key provisions intended to benefit retirement plan participants. As we near the end of 2020, we wanted to make you aware of two of these provisions that will be expiring:
- The last day for coronavirus-related distributions to be processed is December 31, 2020. These distributions allowed individuals affected by COVID-19 to take up to $100,000 from their retirement account. While these distributions are taxable, the 10% early withdrawal penalty is waived and the taxes can be paid over a three-year period. In accordance with the CARES Act, coronavirus-related distributions will not be processed after the end of the year.
- Payments on loans deferred in accordance with the CARES Act will resume in January. Any plan participant who was affected by COVID-19 and opted to have their loan payments deferred will have their loan(s) re-amortized to incorporate the interest accrued through December 31st. Loan payments will resume via payroll deduction during the first pay period in January. It is important to note that because interest continued to accrue while loan payments were deferred, the loan payment amount will differ from the amount that was being deducted prior to deferring the loan.
If you have any questions about your retirement plan or the provisions noted above, please contact your Plan Consultant.