CARES Act: Financial Relief for Coronavirus-Related Hardships

 
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MetLife Resources
June 2020
 
 
CARES Act Legislation
 
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On March 27, 2020 the
Coronavirus Aid, Relief and
Economic Security (CARES - P.L.
116-136) Act passed the House of
Representatives by a voice vote,
the President then signed the bill
into law.
 
 
Coronavirus Aid, Relief and Economic Security Act
 
Coronavirus-Related Distributions
 
 
The CARES Act provides for
coronavirus-related distributions for
amounts up to $100,000 from an
individual’s available vested account
balance without regard to the normal
withdrawal restrictions.
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Profit Sharing
Money Purchase**
403(b)
401(k)
457(b) Governmental
IRAs
 
Distributions can be paid back to any
account that accepts rollovers. The
IRS will issue additional guidance.
The CARES Act does not apply to
nongovernmental 457(b) plans,
nonqualified annuities and annuitized
contracts.
Retirement plans must amend the
plans to incorporate act by the end of
plan year commencing in 2022, 2024
for Gov’t plans.
 
Coronavirus Aid, Relief and Economic Security Act
 
*Most plans
.
 **A money purchase pension plan is not permitted to make a distribution before an otherwise permitted
distributable event merely because the distribution qualifies as a coronavirus-related distribution.
 
Coronavirus-Related Distributions
 
 
*You have experienced an adverse financial consequence due to other factors as provided in guidance issued by the Internal Revenue Service.
Note: Covid19 distributions are not considered a hardship under the IRC.
 
Coronavirus Aid, Relief and Economic Security Act
 
Coronavirus-Related Distributions
 
Rely on a
certification
by individuals
 
Qualifications must apply
to at least one of the
distribution rules
10% early
withdrawals
penalty waived
3-Years repay
period
 
Waived for coronavirus-
related distributions
 
Allowed to repay the
distribution back to their
plan or account as a tax-
free rollover
Pay the federal income tax
on the distribution ratably
over a three-year period
 
Coronavirus Aid, Relief and Economic Security Act
 
Coronavirus-Related Loan Relief
 
 
The CARES Act provides that
eligible participants can take
loans up to the lesser of
$100,000 or 100 percent of their
available vested account
balance.
Available to new loans made
during the 180-day period
following the enactment of the
CARES Act.
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Plan sponsors are permitted to
rely on a certification by
participants that they qualify for
loan relief.
If a plan does not permit loans,
an amendment would be
needed to add a loan provision.
Plan sponsors can increase
number of loans available under
the plan for all participants.
If a participant maxes out the
number of loans available under
a plan and they cannot take
advantage of a COVID-19 loan.
 
The suspension period is to be
added to the original loan term
when repayments, including
accrued interest, resume,
regardless of the length of the
loan’s original term.
Individuals with outstanding
loans with a repayment due
from the date of enactment of
CARES through to December
31, 2020 may delay loan
repayments for up to one year.*
 
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*
This relief expires on December 31, 2020.
 
Coronavirus Aid, Relief and Economic Security Act
 
CARES Act Legislation
 
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The CARES Act provides for a waiver of required minimum distributions
due in calendar year 2020 from most defined contribution plans and IRAs.
This applies to both 2020 tax year and for tax year 2019 if not taken in 2019
(e.g., age 70½ in 2019)
Participants can elect to receive distributions that would otherwise be RMDs in
2020 but may be subject to contract withdrawal penalties.
Coding on IRS Form 1099-R(s) will not change and will reflect that the tax
penalty does apply.
 
 
Coronavirus Aid, Relief and Economic Security Act
 
Plan Amendments
 
 
Coronavirus Aid, Relief and Economic Security Act
CARES Act
Questions?
 
If you have any questions, reach out to
your Relationship Management Team
 
 
Read the full CARES Act
 
Coronavirus Aid, Relief and Economic Security Act
 
CARES Act Legislation - References
 
L0620005247[exp0721][All States][DC]
Slide Note

Good Morning/Afternoon.

This presentation contains some key highlights to Coronavirus Aid, Relief and Economic Security Act, better known as the CARES Act.

The CARES Act provides quick and direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries.

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The CARES Act provides financial relief for individuals facing coronavirus-related hardships such as quarantine, job loss, or reduced work hours. This act allows for coronavirus-related distributions from retirement accounts, with options for repayment and penalty waivers. Business owners and those impacted by COVID-19 can benefit from this legislation until December 30, 2020.


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  1. Coronavirus Aid, Relief and Economic Security Act (CARES Act) MetLife Resources June 2020

  2. CARES Act Legislation The Structure of the Law On March 27, 2020 the Coronavirus Aid, Relief and Economic Security (CARES - P.L. 116-136) Act passed the House of Representatives by a voice vote, the President then signed the bill into law. 2 Coronavirus Aid, Relief and Economic Security Act

  3. Coronavirus-Related Distributions Relief is offered through to December 30, 2020 Eligible Retirement Accounts* Additional Information The CARES Act provides for coronavirus-related distributions for amounts up to $100,000 from an individual s available vested account balance without regard to the normal withdrawal restrictions. Profit Sharing Distributions can be paid back to any account that accepts rollovers. The IRS will issue additional guidance. Money Purchase** 403(b) The CARES Act does not apply to nongovernmental 457(b) plans, nonqualified annuities and annuitized contracts. 401(k) 457(b) Governmental IRAs Retirement plans must amend the plans to incorporate act by the end of plan year commencing in 2022, 2024 for Gov t plans. *Most plans. **A money purchase pension plan is not permitted to make a distribution before an otherwise permitted distributable event merely because the distribution qualifies as a coronavirus-related distribution. 3 Coronavirus Aid, Relief and Economic Security Act

  4. Coronavirus-Related Distributions You have experienced adverse financial consequences because you have been quarantined, furloughed, laid off, or have had work hours reduced due to the coronavirus. You, your spouse, or dependent has been diagnosed with the coronavirus (i.e., SARS-CoV-2 or COVID-19). Diagnosed with virus Financial Loss* Common theme or goal here You own or operate a business and have had to close or reduce hours due to the coronavirus You are unable to work because of a lack of childcare due to the coronavirus. Business Owners Unable to work *You have experienced an adverse financial consequence due to other factors as provided in guidance issued by the Internal Revenue Service. Note: Covid19 distributions are not considered a hardship under the IRC. 4 Coronavirus Aid, Relief and Economic Security Act

  5. Coronavirus-Related Distributions Rely on a certification by individuals 10% early withdrawals penalty waived 3-Years repay period Qualifications must apply to at least one of the distribution rules Waived for coronavirus- related distributions Allowed to repay the distribution back to their plan or account as a tax- free rollover Pay the federal income tax on the distribution ratably over a three-year period 5 Coronavirus Aid, Relief and Economic Security Act

  6. Coronavirus-Related Loan Relief Available to plans through September 22, 2020 Loan Relief Limits Loan Qualifications Loan Repayments Plan sponsors are permitted to rely on a certification by participants that they qualify for loan relief. If a plan does not permit loans, an amendment would be needed to add a loan provision. Plan sponsors can increase number of loans available under the plan for all participants. If a participant maxes out the number of loans available under a plan and they cannot take advantage of a COVID-19 loan. The CARES Act provides that eligible participants can take loans up to the lesser of $100,000 or 100 percent of their available vested account balance. Available to new loans made during the 180-day period following the enactment of the CARES Act. The suspension period is to be added to the original loan term when repayments, including accrued interest, resume, regardless of the length of the loan s original term. Individuals with outstanding loans with a repayment due from the date of enactment of CARES through to December 31, 2020 may delay loan repayments for up to one year.* *This relief expires on December 31, 2020. 6 Coronavirus Aid, Relief and Economic Security Act

  7. CARES Act Legislation Required Minimum Distributions (RMDs) The CARES Act provides for a waiver of required minimum distributions due in calendar year 2020 from most defined contribution plans and IRAs. This applies to both 2020 tax year and for tax year 2019 if not taken in 2019 (e.g., age 70 in 2019) Participants can elect to receive distributions that would otherwise be RMDs in 2020 but may be subject to contract withdrawal penalties. Coding on IRS Form 1099-R(s) will not change and will reflect that the tax penalty does apply. 7 Coronavirus Aid, Relief and Economic Security Act

  8. Plan Amendments Plan Sponsor decides to amend plan Optional Distributions and loans Immediate Adopting provisions The last day of the first plan year beginning on/after January 1, 2022 Deadline Coronavirus Aid, Relief and Economic Security Act

  9. CARES Act Legislation - References Questions? CARES Act If you have any questions, reach out to your Relationship Management Team Read the full CARES Act 9 Coronavirus Aid, Relief and Economic Security Act L0620005247[exp0721][All States][DC]

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