CARES Act Includes Penalty Free Distributions and Changes to Participant Loan Provisions and Repayment Requirements | Pension scheme | Advantages | Human resources | Vanderbilt University
The recently enacted Coronavirus Aid, Relief and Economic Security (CARES) law affects more than $ 2 trillion on individuals and businesses and provides other financial aid as compensation for those affected by the COVID-19 pandemic. It includes several changes to pension accounts / plans.
If you experience negative financial consequences as a result of a quarantine, discharge, layoff or reduction of working hours and / or inability to work due to ‘lack of child care, you may be eligible for financial assistance.
You can claim distributions without penalty of up to $ 100,000 for qualifying coronavirus-related reasons under the CARES Act.
- Income tax from the withdrawal can be paid over a period of three years;
- Members can repay the amount withdrawn to a qualifying pension plan within three years;
- Refunds will not be subject to the contribution limits to the pension plan; and
- All contribution sources (other than defined contribution pension plan sources) will be available.
The CARES law increases the maximum loan limit for qualified individuals, who have been affected by COVID-19, for loans taken out within 180 days of the date of enactment. In addition, it extends the due date for repayment of any Qualified Person’s loan that would otherwise be due in 2020 (but from the date of enactment) by one year by one year.
- Increase the maximum loan limit generally to the lesser of 100% of the acquired account balance or $ 100,000 for loans made to eligible participants from March 27, 2020 to September 23, 2020.
- Allow eligible participants to defer loan repayments that would otherwise be due between March 27, 2020 and December 31, 2020 (“deferral”)
For more information on withdrawal and loan changes under the CARES Act, please log on to the Fidelity website at www.netbenefits.com. Go to the Quick Links drop-down menu and select “Loans and withdrawals” for more information. You can also call the Fidelity Retirement Benefits line at 800.343.0860 and ask to speak with someone who can provide you with information about the CARES Act loan provisions.