More Caring: New CARES Act Guidance for Retirement and Nonqualified Plans

By Diane Morgenthaler and Sarah L. Engle on July 15, 2020

Posted In Employee Benefits, Employee Stock Ownership Plans (ESOPs), Executive Compensation, Retirement Plans

New Internal Revenue Service (IRS) guidance expands the availability of Coronavirus Aid, Relief and Economic Security Act (CARES Act) distributions and loans under eligible retirement plans, and it provides important clarifications regarding how to administer and report CARES Act distributions and loans. The guidance also provides welcome relief for a participant who receives a CARES Act distribution, allowing the participant to revoke an otherwise irrevocable salary deferral election under a nonqualified deferred compensation plan. Finally, consistent with prior guidance, the new IRS guidance confirms that CARES Act provisions are optional, meaning that plan sponsors may choose whether to implement CARES Act changes.

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Tags: 401(k), 409A, 72(p), 72(t), CARES Act, CARES distribution, CARES loan, Coronavirus Aid Relief and Economic Security Act, covered distribution, COVID-19, deferred compensation plan, defined contribution plan, Internal Revenue Service, IRS, nonqualified plan, plan loan, qualified individual, required minimum distribution, RMD

Diane Morgenthaler
Diane M. Morgenthaler focuses her practice on employee benefits and executive compensation. She represents clients in matters before the US Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation. Diane serves as employee benefit counsel to Fortune 500 corporations and other global corporations, and represents both public and private clients. She regularly designs and implements a variety of employee benefit plans and programs. Diane has extensive experience in employee benefit issues involved in acquisitions, reorganizations and divestitures and in the design of employee benefits plans following such transactions. She also advises clients in matters involving multi-employer withdrawal liability, fiduciary liability and benefit claims. Read Diane Morgenthaler's full bio.

Sarah L. Engle
Sarah Engle focuses her practice on employee benefits matters. She counsels clients regarding a variety of issues, including the design, drafting and operation of tax-qualified pension and profit sharing plans, health and welfare arrangements, and deferred compensation plans. Sarah has experience advising clients on employee benefits design, implementation and transition matters arising in connection with corporate mergers and acquisitions. Read Sarah Engle's full bio.

More Caring: New CARES Act Guidance for Retirement and Nonqualified Plans

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