Published May 26, 2020 – The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by the President of the United States on March 27, 2020. The CARES Act, among its many provisions, provides relief for both retirement plan participants and plan sponsors. A summary of the key provisions impacting retirement plans is provided below:
Required minimum distributions
Section 2203 of the CARES Act provides relief to certain types of defined contribution plans by allowing for a temporary waiver of the required minimum distribution (RMD) requirements under Section 401(a)(9) of the IRC. For calendar year 2020, RMD requirements do not apply to plans of the following types:
- Tax qualified defined contribution plans, such as 401(k) plans;
- IRC Section 403(a) and 403(b) plans;
- Certain eligible governmental employer-sponsored non-qualified deferred compensation plans; and
- Individual retirement plans (IRAs).
For plan participants scheduled to begin receiving an RMD during 2020 (ie. a participant who attained age 70 ½ during 2019 and whose required beginning date for their first RMD is in calendar year 2020), the CARES Act has eliminated the requirement for any RMD. Participants within one of the plan types listed above and who meet these criteria would see a waiver of their 2019 and 2020 RMD.
Note on plan amendments – While these provisions can be implemented immediately, plans must formally amend their plan documents to allow for these provisions by the last day of the first plan year beginning on or after January 1, 2022 (or January 1, 2024 in the case of a governmental plan). During calendar year 2020, as long as the plan operates as though an amendment were being made to the plan immediately, plans will not be treated as failing to operating in accordance with their terms if they amend by this deadline.
This article is an excerpt from Dopkins COVID-19 Employee Benefits Newsletter. To read the complete content, please click here.
For more information, please contact Vincent Pasini at email@example.com or Justin Renaud at firstname.lastname@example.org.
About the Author
Justin S. Renaud CPA
Justin is a member of Dopkins Assurance Services Group. He helps provide management with financial information by researching and analyzing accounts and preparing financial statements.
About the Author
Vincent Pasini CPA
Vincent Pasini holds extensive experience in contract design, management and review/audit of financial statements.