• CARES Act Update—Expanded Definition of ‘Qualified Individual’
• CARES Act Update—More PPP Loan Guidance from SBA
• Weekly Updates to Participants

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

CARES Act Update—More PPP Loan Guidance from SBA

On June 23, 2020, the Small Business Administration (SBA) published additional regulatory guidance about the Paycheck Protection Program (PPP). The SBA issued a new interim final rule regarding PPP loan forgiveness and SBA loan review. The guidance reiterates much of what was published last week, and which we described in brief in the June 23, 2020 On Board Express. However, one new wrinkle was added regarding forgiveness with this new rule. Under the rule, PPP borrowers can apply for loan forgiveness before the end of their 24-week covered period, once the loan proceeds are completely spent.

However, the explanation of this option seems to leave open questions about situations wherein the borrower has furloughed employees or reduced their wages. This new rule states that if there has been a reduction in wages by the time the loan forgiveness application is made, those reductions must be taken into account for the entire covered period. It is unclear how the borrower will know what is going to happen for the remainder of the covered period. Further, it is unclear what happens if the borrower furloughs employees or reduces wages after the loan forgiveness application is made. Additional guidance from the SBA may be needed to clarify these uncertainties.

Please direct any questions you may have about the CARES Act to Tony Prestipino, Andy Hendren, Steve Clark or Jim O'Connell.

Weekly Updates to Participants

This week's participant e-blast communication was sent yesterday, June 24. It details Wespath’s efforts to address systemic racial injustice by highlighting a statement signed by General Secretary Barbara Boigegrain, as well as other general secretaries and church leaders, and the Investor Statement of Solidarity to Address Systemic Racism and Call to Action to which Wespath is a signatory. This issue also includes a video outlining plans by Wespath’s Benefits Education team to provide virtual educational opportunities and, for HealthFlex participants, provides information about ongoing coverage of telemedicine and testing and treatment for COVID-19. Click here to view the version sent to HealthFlex participants; click here to view the non-HealthFlex email.

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