This CLE course will provide employee benefits counsel with an in-depth analysis of the nuances and potential compliance traps with respect to the CARES Act retirement plan distribution and loan provisions. The panel will discuss recent IRS guidance regarding coronavirus-related distributions and loans, the waiver of 2020 required minimum distributions, and related ERISA compliance and plan administration issues. The panel will also discuss state tax considerations and the impact of receiving CARES Act retirement plan distributions on unemployment and disability benefits.
On June 19, 2020, the IRS issued Notice 2020-50, which expanded the categories of “qualified individuals” who can receive favorable treatment for retirement plan distributions and loans under the CARES Act.. This guidance also addresses plan administrator reliance on participant certifications in determining whether a distribution satisfies CARES Act requirements, describes how distributions are to be reported under various scenarios, and includes a safe harbor for complying with the CARES Act provision delaying repayments of participant loans.
On June 23, the IRS issued Notice 2020-51, which explained what 2020 waived required minimum distributions can be rolled over, extended the rollover period for such distributions, provided relief from the one-per-12 month limitation on IRA rollover contributions, and provided a sample plan amendment for defined contribution plan sponsors to adopt in order to implement the required minimum distribution waiver provisions of the CARES Act.
The IRS guidance provides some clarity to plan administrators and participants regarding the federal tax treatment of CARES Act retirement plan distributions. However, state law issues remain unclear, such as whether these distributions will be subject to taxation under state law and whether they will reduce or offset unemployment or disability benefits.
Listen as our panel discusses the IRS rules guidance regarding retirement plan distributions and participant loans under the CARES Act, as well as state tax and benefit offset issues. Our panel will also offer best practices for plan administrators.
