IRS & DOL CARES Act Guidance & Clarifications
On June 19, 2020, the IRS issued Notice 2020-50, which provides additional guidance on Coronavirus Related Distributions and Loans from Retirement Plans under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). On June 23, 2020, the IRS issued Notice 2020-51, which provides additional guidance on the waiver of required minimum distributions for 2020. Below is summary:
NOTICE 2020-50 & 2020-51
Expands CRD and Loan qualifications to individuals who 1) experience reduction in pay or have a job offer rescinded or start date delayed due to COVID-19 2) have a spouse or person sharing an individual’s principal residence experiencing an of the qualifying requirements.
Amends self-certification rules to include Loans.
Clarifies the responsibility of the plan sponsor as it relates to CRDs, Loans, and RMDs.
Permits rollovers of waived RMDs and certain related payments, including an extension of the 60-day rollover period for certain distributions through August 31, 2020;
Provides a sample plan amendment that, if adopted, would provide participants a choice whether to receive waived RMDs and certain related payments.
EBSA DISASTER RELIEF NOTICE 2020-01
Extended filing relief for Form 5500 and Form M-1 until July 15, 2020.
Extended deadline to provide certain notices and disclosures which are due on or after 3/1/20, until 60 days after the announced end of the COVID-19 National Emergency.
Allows blackout notices to be provided less than 30 days before the beginning of the blackout period.
Waived enforcement action with respect to temporary delay in remitting participant contributions and plan loan repayments due on or after 3/1/20 through 60 days after the announced end of the COVID-19 National Emergency.
Allows for corrective actions for failure to follow the terms of the plan regarding loans and distributions in certain circumstances under areas of DOL jurisdiction.
Although both the IRS and DOL have provided additional relief, we recommend plan sponsors continue to require appropriate documentation and compliance in advance of any loan or distribution and maintain a consistent schedule when administratively feasible regardless of extensions.