The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 does more than aid small businesses. In addition to the PPP loans that received the bulk of the media attention, the CARES Act authorizes qualified retirement plan sponsors to amend retirement plans (401(a), 401(k), 403(b) and government plans) to help participants (qualified employees) who have been adversely economically impacted by the Coronavirus by allowing the deferral of loan payments. Once such an amendment is implemented by a plan sponsor, participants who have outstanding loan amounts from the qualified retirement plan may elect to defer loan payments for up to one year (with interest accruing) between now and December 31, 2020.
The retirement plan participant may elect loan repayment deferrals if they meet one of the following criteria:
- They are diagnosed with the Virus by a test approved by the CDC;
- Their spouse or dependent is diagnosed with the Virus by a test approved by the CDC; or
- They experienced adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury.
During any deferral period, interest would continue to accrue. Once loan payments recommence, the accrued interest is included in loan calculations to determine the new payment amounts. The date of the final payment is adjusted by the length of time deferred. The Plan Sponsor may rely on an employee’s certification that the employee satisfies the condition.
Eric Wieland puts his mastery of tax law and sharp attention to detail to work in his practice. He focuses on the areas of Estate Planning, Business Planning, Taxation, Qualified Retirement Plans, ERISA Compliance, and Trust and Estate Administration. The belief that no two clients are alike and no set of legal circumstances or objectives are the same is at the heart of his specialized, individual approach.