Congress has enacted the Coronavirus Aid, Relief and Economic Security Act (the “Act”), which allows or requires changes to retirement plans.  The following is a summary of the material provisions.

Coronavirus-Related Distribution.  The Act permits a plan to allow a participant who is a “qualified individual” to take a penalty free plan distribution of up to $100,000 before December 31, 2020. The distribution is taxable unless it is repaid within a three-year period.  A “qualified individual” is someone who certifies that (i) they have been diagnosed with COVID-19, (ii) a spouse or dependent has been diagnosed with COVID-19, (iii) they have experienced adverse financial consequences as a result of being quarantined, loss of work or business losses or (iv) they have suffered other consequences as may be set forth in regulations.

Loan Increase.  A plan may permit a qualified individual to receive a plan loan of up to $100,000 and 100% of the participant’s account balance. This amount is essentially twice what is ordinarily available.  A plan may make an increased loan available until September 23, 2020.

Suspension of Loan Repayments.  A plan must permit a qualified individual to delay for at least one year the due date of any loan repayment coming due on or prior to December 31, 2020.  Interest will continue to accrue and any subsequent payments must be adjusted to reflect the modified due date and interest accruing during the delay.

Waiver of Required Minimum Distributions.  For all participants, required minimum distributions are waived for any distribution that would otherwise be required to be made in calendar year 2020.

The Act does not require formal plan amendments until December 31, 2022, at the earliest, for calendar year plans, as long as the plan is administered in accordance with applicable changes made prior to that date.