Ten Percent Tax on Early Distributions
The 10% tax that generally applies to distributions prior to age 59-1/2 from tax qualified retirement plans will not apply to any Coronavirus-related distribution, assuming this does not exceed $100,000. Amounts can be re-contributed back to the qualified plan within a three year time frame.
Qualified Plan Loans
A participant who would be eligible to receive a Coronavirus-related distribution from a tax qualified plan may receive plan loans in an amount not to exceed the lesser of $100,000 100% of the participant’s vested account balance. Also, a participant who has an outstanding plan loan or obtains a plan loan may defer any payments otherwise until December 31, 2020.
Temporary Waiver of Required Minimum Distributions
The required minimum distribution requirements for individuals over 70 ½ will not apply to qualified retirement plans for 2020.
Employers are not required to adopt plan amendments prior to making these changes, rather they will have at least through the last day of the plan year ending 2022.
Delay in Payment of Required Contributions to Single-Employer Pension Plans
The due date for minimum required contributions to single-employer defined benefit pension plans that would be due during calendar year 2020 is now January 1, 2021.
For more information, contact Paul Esche, CPA, CCIFP CCA at firstname.lastname@example.org.