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Committee Blog: Retirement Plans & the CARES Act

Committee Blog: Retirement Plans & the CARES Act

Risk Management Committee

CCIA Risk Management Committee

Retirement Plans & the CARES Act - CCIA Risk Management Committee Blog Post

If you provide an employer-sponsored retirement plan there are important temporary features to consider extending to your employees.

On March 27, 2020, the CARES Act was signed into law. A set of lesser-known provisions temporarily allow qualified individuals to access retirement funds from their employer-sponsored retirement plan. 

Qualified individuals can access funds in several ways:

  • May withdraw up to $100,000 from their retirement account
  • Withdrawals must be completed before December 30, 2020


  • Request a loan of up to $100,000 
  • Loans must be originated prior to September 23, 2020
  • Existing and New Loan repayments with due dates from March 27, 2020 – December 21, 2020 can be postponed until 2021

Your 401(k) provider will advise you of all the rules, but here are key tax provisions: 

  • The 10% additional tax on early distributions does not apply to COVID-related distributions
  • Distributions are included in income; individuals can choose over a one or three-year period
  • Distributions may be repaid over a period of up to three years and avoid federal income tax on the distribution

To qualify for these provisions, individuals must meet one of the following criteria:

  • They have been diagnosed with COVID-19;
  • Their spouse or dependent has been diagnosed with COVID-19; or
  • They have experienced adverse financial consequences because the individual, the individual’s spouse or a member of the individual’s household experienced the following due to COVID-19:
  • Being quarantined
  • Being furloughed
  • Being laid off
  • Having work hours reduced
  • Being unable to work due to lack of childcare
  • Closing or reducing hours of a business that they own or operate
  • Reduced pay or self-employment income or
  • Having a job offer rescinded or start date for a job delayed

What’s next?

Employers interested in extending these CARES Act provisions to employees, should contact their 401k provider. Employers can typically expect their provider to add a quick amendment to their plan that covers these temporary provisions. Lastly, employers will want to communicate these changes to their current workforce, furloughed and/or laid off employees who still have access to their retirement plan. 


The information provided in this post is not intended to constitute legal advice and therefore should not be relied upon as such. Instead, this post is exclusively intended for general informational & educational purposes.  Given the dynamic nature of the industry, this document may not constitute the most up-to-date legal or other information. Use of this document does not create an attorney-client relationship between the reader and any individual at CCIA or CCIA as a whole. Operators should contact their attorney to obtain advice with respect to any particular legal matter.  No reader of this post should act or refrain from acting on the basis of information without first seeking legal advice from counsel in the relevant jurisdiction. Only a retained attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  For specific legal needs please contact an attorney.  Should you need an attorney recommendation CCIA has several resources, please contact for more information. 

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