Congress often gets chided (and justifiably so) for moving at the speed of a glacier, but there are times when they do act with deliberate speed. The CARES Act was one of those times.
They acted quickly to pass legislation that increased the size of loans that participants can take from retirement plans (from a maximum of $50,000 to as much as $100,000), while at the same time extending the time they have to pay those loans back. Also, most retirement plans do not allow active participants to request distributions from their accounts. To receive a distribution from your retirement plan, the IRS requires what is known as a “distributable event.” That generally means that you have separated from service. Here again, within the CARES Act, anticipating the layoffs precipitated by COVID-19 and employees’ needs for access to cash, Congress allowed for what are known as in-service distributions of up to $100,000.
Sign up to download DEMYSTIFYING HOW THE CARES ACT AND IRS HAVE CHANGED 2020 REQUIRED MINIMUM DISTRIBUTIONS (RMDs)
