In response to the extraordinary financial challenges posed by the coronavirus (COVID-19) pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides owners of IRAs and employer sponsored retirement plans (employer plans) accounts, who were impacted by the COVID-19 pandemic, the opportunity to take COVID-19 related distributions and plan loans in 2020. COVID-19 related distributions are eligible for tax advantages, which includes: a waiver of the 10% early distribution penalty that generally applies to distributions taken before the account owner reaches age 59 ½ , three years to rollover the distributions, and the eligibility to spread the income from the distribution over three years.
For employer plans which allow it, the CARES Act increases the plan loan limit to $100,000 from $50,000 and the percentage rate from 50% to 100%.
The distribution rules that applied to the beneficiaries of IRAs and employer plans changed with the enactment of the Setting Every Community Up for Retirement Enhancement Act of 2019, (SECURE Act) in December, 2019, limiting the distribution options that apply to designated beneficiaries. Unless a legislative change occurs, these SECURE Act changes apply starting in 2021.
The panelists will review many of the most important, newly enacted SECURE Act changes that take effect starting in 2021 and the year 2020 changes brought about by the CARES Act.