July 2020 Vol. I, Issue 1
CARES Act Update—Expanded Definition of 'Qualified Individual'
The federal government continues to issue guidance to clarify and fine-tune features of the massive Coronavirus Aid, Relief and Economic Security Act (CARES Act) passed in late March.
On June 19, 2020, the Internal Revenue Service (IRS) released Notice 2020-50, which provides additional guidance related to CARES Act provisions for retirement plans and participants. The new guidance makes these clarifications:
- "Qualified Individual" definition—expands the definition of who is a "qualified individual" under the CARES Act, which may entitle such individuals to new distribution opportunities, special tax treatment on such distributions, and a temporary loan repayment delay. (Individuals seeking CARES Act benefits self-certify that they are "qualified"; Wespath does not make this determination.)
- Coronavirus-related distributions (CRDs)—clarifies that distributions that would have been required minimum distributions (RMDs) from retirement plans in 2020 (if not for the waiver of 2020 RMDs) may be designated by qualified individuals as CRDs.
- Loan repayment delays—clarifies how loan repayments may resume in January 2021.
Wespath has updated these documents to reflect the changes.
- CARES Act Retirement Plan FAQs
- CARES Act Coronavirus-Related Distributions fact sheet
- CARES Act Delay of Loan Repayments fact sheet
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