COVID-19 Guidance Cares Act Provides Relief Through Employee Benefits Plans
By George Parker and Toby Akrab
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), passed by Congress on March 27, 2020, provides more than $2 trillion in relief for both companies and individuals affected by the COVID-19 pandemic. Given the economic impacts of COVID-19, Congress recognized that people may need increased access to their retirement plan savings, and employers may not be able to make required plan contributions under ERISA. As a result, Congress included in the act various provisions related to qualified employee benefit plans under ERISA.
Plan sponsors should coordinate with their trustees, custodians and third-party administrators to understand these new plan provisions, including how they will be enacted, so that newly allowable transactions will be approved, when appropriate, and not treated as prohibited transactions or plan errors.
Individuals should understand the new provisions related to loans and distributions, both in-service and required minimum, including related tax effects, before requesting relief under the CARES Act.
A summary of the CARES Act provisions affecting employee benefit plans are included in the tables below.