(866) 818-4472

Open Account Client Login

Information Regarding the CARES Act – Effective March 27, 2020

As a result of the Coronavirus pandemic, on March 27, 2020, the President of the United States signed into law the $2.2 trillion CARES (Coronavirus Aid, Relief and Security) Act, effective immediately. The act has several provisions that apply to retirement investors. Below are some key impacts for retirement investors but to determine the complete effect of this law, individuals with retirement accounts should consult their tax and legal advisors.

Key Impacts to Retirement Investors:

Hardship Distributions

  • An eligible individual may take up to $100,000 from their retirement plan (IRA, tax-qualified retirement plan, section 457(b) governmental sponsored deferred compensation plans) without incurring the 10% early withdrawal penalty.
  • An eligible individual may make one or more repayments of their distribution over three years. If a retirement investor chooses to repay over a three-year period, they will be allowed to skip the tax payments, even if the amount they redeposit exceeds the annual contribution limit. For example, if you are 45 years old and withdrew $40,000 from your traditional IRA, you can repay annually beyond the contribution limit of $6000.
  • The income from a coronavirus related distribution may be treated as having been taken over a three-year period.  This would lessen the tax liability that would have originally occurred in just one year.
  • These distributions will not be subject to mandatory 20% tax withholding.

Plan Loans

  • For 401(k) plans allowing loans, the maximum loan amount has been increased from $50,000 to $100,000 or 100% of vested account balance (whichever is less).  The loan provisions only apply to loans taken by eligible individuals, during a 180-day period beginning 3/27/20.
  • Loan repayments may be delayed for up to one year.  Any subsequent repayments would be adjusted for the delay of interest and in determining the five-year period and term of the loan.
  • IRAs do not offer loan opportunities. Taking a loan from your IRA is a prohibited transaction.

Required Minimum Distribution Suspension

  • The 2020 RMD requirement has been waived, including for those with a required beginning date of 4/1/2020. 
  • If an individual has already distributed an amount originally intended for their 2020 RMD, and wishes to return it, the 60 day rollover rule would apply. This does not apply to beneficiaries.

Plan Amendments

  • Employers who take advantage of CARES Act changes will need to amend their plan documents by December 31, 2022.


Plan participants and IRA owners may self-certify that they meet coronavirus eligibility outlined below.

  • A Coronavirus-Related Distribution is for distributions made on or after 1/1/20 and before 12/31/20 from an IRA or Qualified retirement plan (unless from a loan distribution).
  • An individual must meet one of the following criteria:

            -Diagnosed with SARS-CoV-2 or COVID-19 by a CDC approved test

            -An individual’s spouse or dependent has been diagnosed

            -An individual who experiences adverse financial consequences as a result of being quarantined, being furloughed, laid off, reduced work hours, unable to work due to lack of child care, closing or reduced hours of a business owned or operated by an individual,  all due to the virus.