Coronavirus Aid, Relief and Economic Security Act (CARES Act)

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law.

Highlights of Retirement Plan Changes:

  • Coronavirus Related in service distributions is offered through 12/31/2020.
  • Loan limits increased to $100,000.
  • Suspension of loan payments up to a year.
  • Waiver of 2020 Required Minimum Distributions.

Safe Harbor Contributions

  • If an employer chooses to reduce/suspend safe harbor contributions for a plan year, then the plan will be subject to ADP/ACP testing for the entire plan year
  • Employer must fund safe harbor contributions up until 30 days after participants receive supplemental notice
  • If the plan is top heavy, the plan may no longer rely on the safe harbor top heavy exemption
  • Plan should consider top heavy status before making decision to amend out of safe harbor status
  • A supplemental notice must be given to all eligible employees explaining the effect of the amendment which reduces/suspends the safe harbor contributions, the amendment’s effective date, and, if removing matching contributions, information on how a participant may change his or her deferral election
  • Notice must be provided at least 30 days prior to the effective date of the reduction/suspension
  • Participants must be given a reasonable opportunity to change their deferral elections before the reduction/suspension goes into effect
  • The plan must be amended to reflect the reduction/suspension of the safe harbor contributions, and that the plan will be subject to ADP/ACP testing for that entire plan year

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