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The CARES Act Key Components

Click HERE to download "The CARES Act Key Components"

  1. The CARES Act Paycheck Protection Program Update:

This is the standard form approved SBA lenders will use as the basis for data gathering.

For those searching for lenders, visit this SBA’s website:

2. The CARES Act: other provisions

An additional 13 weeks of federally funded benefits (on top of the standard 6 months) for those currently receiving UI benefits and new applicants.

An additional $600 per week for up to four months (expires July 31).

Direct Cash Payments of $1,200 for each adult with an annual income of $75,000 or less (the benefit begins to phase out for those with incomes above $75,000), plus $500 for each child.

3. Over-The-Counter Pre-Tax Reimbursement: 

A prescription from a physician is no longer required for OTC Prescriptions for both Flexible Spending Plans (FSA) and Health Savings Accounts (HSA). It can be retroactively applied 1/1/2020 and will require adjustments to your Section 125 plan documents. 

4. Retirement Plan Loan and Distributions:  

The CARES Act allows distributions or loans from Qualified Retirement Plans for qualified individuals who satisfy the following:

The participant has been diagnosed with COVID-19 and the diagnosis has been confirmed by a CDC approved test.

The spouse or dependent of the participant has been diagnosed with COVID-19

The participant has suffered financially from the pandemic because:

They were laid off, furloughed, quarantined, or had hours reduced.

They are unable to work due to the lack of childcare due to COVID-19.

Their own business has closed or reduced hours.

Determination of a qualified individual can depend on a participant's self-certification. If you are the beneficiary of a deceased participant, you also eligible for distributions. 

5. Distribution from Retirement Accounts:

May be taken from any eligible retirement plan including 401(k), IRA’s, 403(b) and 457 Plans.

Distribution of up to $100,000 from a vested account balance.

Distribution request must be made by 12/31/2020.

The 10% early withdrawal penalty tax is waived.

The 20% mandatory tax withholding is waived.

Taxes will still be due by the participant, but can be paid over a 3-year period.

If a participant repays the withdrawn amount back into a qualified retirement account the amount will not be taxed as ordinary income.  These repayments will not count as a contribution toward the IRS annual contribution limits.

The CARES Act does not allow for this type of distribution from a Defined Benefit, Cash Balance or Money Purchase Plan.

6. Loans from Retirement Accounts: 

If your retirement plan currently allows participant loans, a participant can take out a higher loan amount and/or delay repayment of new and existing loans.

For new participant loan requests: 

Loan must be requested no later than September 23, 2020.

The maximum limit for a loan is increased to 100% of the vested account balance or a maximum of $100,000.

Repayments may be delayed for up to 12 months.

For existing participant loans:

Participants may increase their loan amount, and/or delay loan repayments for up to 12 months any loan repayment that is due between 3/27/2020 and 12/31/2020.

If a participant delays payment, their total repayment period is extended by that same amount of time (giving participants longer than the traditional IRS rule of 5 years to repay).

7. Required Minimum Distribution Suspension: 

No RMD’s are due for individuals who have been taking RMD’s in previous plan years.

Any RMD’s due in 2020 not already distributed are waived.

8. Delayed Funding for Single Employer Defined Benefit and Cash Balance Plans: 

The due date for any defined benefit contribution during 2020, for 2019 Plans, is extended to January 1, 2021.

Information provided by VantagePoint Benefits