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IRS Guidance Expected About Coronavirus-Related Distributions and Loans

By June 16, 2020No Comments

The CARES Act, which became law on March 27th, provides Coronavirus-related “relief” that includes special distribution options for retirement plans and IRAs and enhanced loan amounts and loan repayment suspension for certain retirement plans. The law raises more questions than it answers, and the IRS “quickly” released questions and answers (Q&As) the first week of May. (https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers) Although limited, the Q&As address many uncertainties, such as clarifying that employers have the option to adopt these changes for their retirement plans – not mandatory adoption – and the last day to obtain a COVID-based enhanced loan is September 22nd not the 23rd. Also, the IRS referenced as helpful the “principles” set forth in 2005 guidance issued following somewhat similar (but not exactly the same) law changes made after Hurricane Katrina. However, the IRS acknowledged that much more guidance is needed. We are awaiting that information, which ACSI (www.acsi-ny.com or mbrand@acsi-ny.com) will share with clients when released.