As the conversations surrounding CARES Act provisions continue to evolve, we are constantly updating our FAQs to provide the most in-depth and up to date information. This week, as a result of a lot of hands-on work with our clients to implement these provisions, we have nearly doubled the information available. We've pulled a question from a few of the new sections on our page to highlight below, but for the full update visit our FAQ page.
There are differences of opinion on that. For starters, even if you have to make an affirmative election, formal plan amendments are not required until the end of 2022; however, we are recommending some sort of current documentation so that there are no questions down the road. We discuss that in more detail below.
Beyond the documentation question, the answer is a little bit of both. The reason is that, in general, most of the provisions in the CARES Act have two components – access via loans and distributions and the tax treatment of any amounts a participant receives. Plans generally have the option of whether or not they want to expand access, but once available, the tax-related relief applies to all participants who qualify. Not to sound like a broken record, but we address this for each provision throughout this FAQ.
A number of recordkeepers and TPAs are already reaching out to plan sponsors on their decision regarding the optional provisions of the CARES Act. While some are waiting for instructions from plan sponsors, others have made some assumptions on how to proceed. The National Association of Plan Advisors has compiled a list of service providers and their defaults. It is available here.
Yes, for affected participants, the CARES Act delays the deadline for one year for any loan payments (on new or existing loans) that would otherwise be due between March 27, 2020, and December 31, 2020. Interest continues to accrue on those payments at the existing interest rate, but the 5-year maximum repayment term for non-residential loans can be extended by the length of the postponement.