CARES Act Impact On Retirement Plans

Effective March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") brings immediate changes and relief to certain qualified retirement plans, consistent with natural disaster relief issued in the past and the relief provided after the 2008 economic downturn. The changes are described below in Q&A format, which provide participants with increased access and special tax treatment for plan distributions in the midst of a pandemic.

What Is the Relief That Was Provided?

There are four pieces of relief available for plan sponsors under Sections 2202 and 2203 of the CARES Act:

• New Withdrawal Right. A plan that is subject to the restrictions of Code Secs. 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), 457(d)(1)(A), and section 8433(h)(1) of title 5 of the U.S. Code can provide a new in-service distribution right of up to $100,000, meaning this distribution right is generally available under 401(k) plans, 403(b) plans, and governmental