News

Senate Passes Bill to Extend PPP Small Business Loan Application Deadline

On Tuesday, the United States Senate passed by unanimous consent a bill to extend from June 30, 2020, to August 8, 2020, the deadline for businesses to apply for a Paycheck Protection Program (PPP) loan administered by the federal Small Business Administration.

PPP loans were created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, targeted to businesses with no more than 500 employees. The purpose of the program is to assist small employers in retaining employees on their payrolls in a time of financial stress during the coronavirus (COVID-19) pandemic. More than $130 billion of the $669 billion appropriated for the program had not been applied for as the June 30th deadline approached.

If certain conditions are met, PPP loans can be forgiven and treated as a grant. Among the conditions for full forgiveness is a requirement that 60% of loan proceeds be used for payroll expenses. These expenses can include not only wages and salaries, but also employer contributions to defined contribution and defined benefit retirement plans. Expenses can also include providing group health care coverage, including payment of insurance premiums.

As this is reported, the House of Representatives had yet to approve the bill, which is required—in addition to signing by President Trump—for the application deadline to be extended.

 


IRS Guidance Provides Limited Relief and Clarification for 401(k) and 403(b) Plans that Suspend or Reduce Safe Harbor Contributions Mid-Year

The IRS has issued Notice 2020-52, guidance that provides sponsors of 401(k) and 403(b) safe harbor plans limited relief from certain otherwise-applicable requirements for mid-year suspension or reduction of safe harbor matching or nonelective contributions.

Notice 2020-52’s temporary relief is being granted as a consequence of the widespread economic challenges facing employers as a result of the coronavirus (COVID-19) pandemic.

 

Requirement for Mid-Year Suspension of Safe Harbor Contributions

In order to suspend safe harbor matching or nonelective contributions mid-year, a sponsoring employer generally must meet one of the following requirements.

  • The employer must be operating at an economic loss.
  • The employer must have given employees timely notice prior to the start of the plan year that the plan might be amended to suspend safe harbor contributions during the coming plan year, and that such suspension would not apply until 30 days after a mid-year supplemental notice is given.

 

Temporary Relief for Mid-Year Reduction or Suspension of Safe Harbor Contributions

Employers that adopt or have adopted between March 13, 2020, and August 31, 2020, an amendment to suspend or reduce 401(k) or 403(b) safe harbor matching or nonelective contributions, will not be considered to have violated the economic loss or pre-plan year notice requirements described above.

 

Temporary Relief for Nonelective Contribution Supplemental Notice

Notice 2020-52 also provides temporary relief for employers that amended or amend their plans for a mid-year reduction or suspension of nonelective contributions, without providing a supplemental notice to employees at least 30 days before the reduction or suspension. This notice requirement will be treated as having been met if the notice is provided to employees by August 31, 2020. This relief is not being extended for a reduction or suspension of safe harbor matching contributions.

 

Clarification on Reduction or Suspension of Contributions for HCEs

Notice 2020-52 also provides further clarity on mid-year amendments to reduce certain contributions to highly compensated employees (HCEs).

In general, a reduction or suspension of safe harbor contributions only for HCEs is not treated as an impermissible reduction, since contributions on behalf of HCEs are not included in the definition of safe harbor contributions. However, Notice 2020-52 clarifies that a notice to HCEs of the reduction or suspension is still required, and a new deferral election opportunity must be given.

Notice 2020-52’s relief provides a degree of assurance that employers will not be violating safe harbor plan rules that pertain to reductions, suspensions, and notices, if they satisfy its conditions. But the guidance does not provide relief from ADP/ACP nondiscrimination testing for the plan year in which such reductions or suspensions have taken place.

 

 

 


DOL Issues Guidance on Investment Advice for Workers, Retirees to Replace Vacated 2016 Regulations and Exemptions

The Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) has released a guidance package entitled Improving Investment Advice for Workers and Retirees Exemption. The guidance package includes a News Release, Fact Sheet, Proposed Class Exemption, and a Technical Amendment.

This guidance, to a greater or lesser degree, is meant to replace the DOL’s 2016 final regulations and accompanying exemptions on fiduciary investment advice. After several implementation delays, that 2016 guidance was struck down as “regulatory overreach” by the U.S. Fifth Circuit Court of Appeals in 2018.


IRS Notice Adds to Guidance on Waiver of 2020 Required Minimum Distributions

In issuing Notice 2020-51 on June 23, 2020, the IRS provided much-needed additional guidance—and some welcome relief—pertaining to the 2020 suspension of required minimum distributions (RMDs). The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, signed into law by President Trump on March 27, 2020, suspended for the 2020 tax year the requirement that these distributions be taken from employer-sponsored defined contribution retirement plans and IRAs.

Notice 2020-51 notes the similarity to a previous RMD waiver granted in 2009 by the Worker, Retiree, and Employer Recovery Act (WRERA), and the subsequent guidance and transition relief provided then in IRS Notice 2009-82. This was in response to the economic downturn at the onset of the Great Recession.

RMDs generally must be taken each year beginning when plan participants or IRA owners reach age 72 (formerly age 70½) or—for some plan participants who work beyond age 72—retire. In general, IRA and retirement plan beneficiaries are also subject to RMDs.

The timing of the 2020 RMD waiver was problematic for those who had already taken distributions in 2020 that they believed were required; especially multiple periodic distributions, or beneficiary distributions. In several tangible ways, Notice 2020-51 has come to their rescue.

Notice 2020-51 details are summarized below.

Direct Rollover, Notice, and Withholding Relief

Plan administrators who treated a 2020 distribution as an RMD that was not eligible for rollover—and thus did not permit a direct rollover, provide a 402(f) notice, or withhold at a 20% rate—will not be considered to have failed to meet these requirements.

RMD Amounts Eligible for Rollover

Eligible for rollover under this guidance are amounts that—but for the waiver—would have been 2020 RMDs (including an amount to be taken by an April 1, 2021, required beginning date (RBD)), and amounts that are part of a series of periodic payments made at least annually over life expectancy, or over a period of 10 or more years.

Retirement Plan Rollover Deadline Extended to August 31, 2020

Notice 2020-51 permits the rollover of waived retirement plan RMDs—amounts withdrawn or distributed in 2020 in the belief they were required—through August 31, 2020, without regard to the normal 60-day limitation. The rollover is limited to the amount of the waived 2020 RMD.

IRA Repayment Deadline Extended to August 31, 2020

Notice 2020-51 permits the repayment of waived IRA RMDs—amounts previously withdrawn or distributed in 2020 in the belief they were required—through August 31, 2020. This can be done without regard to the normal 60-day limitation for IRA-to-rollovers. “Repayments” that are made by August 31, 2020, will not be considered to violate the one-rollover-per-12-months limitation or the restriction on rollovers for nonspouse beneficiaries. It is not well-defined at this time what reporting distinctions there may be between the reporting of rollovers vs repayments. It appears that “repayments” (vs rollovers) must be to the distributing IRA. Distributions less than 60 days before August 31, 2020, would be eligible for rollover if all rollover requirements were met.

Defined Contribution Plan Sample Amendment

Notice 2020-51 provides a sample defined contribution plan amendment that provides plan participants and beneficiaries the choice of receiving or not receiving amounts that represent waived RMDs, with no impact on other distribution provisions. The amendment follows the design of pre-approved document plans that use a basic plan document and an adoption agreement.

IRA Document Amending

IRA documents are not required to be amended for the CARES Act 2020 RMD waiver. But to ensure clients receive up-to-date information, IRA disclosure statements may need to be revised to reflect the waiver.

QRP Beneficiary Payout Option Amending

For qualified retirement plans that permit beneficiaries to choose between life expectancy payments and a 5-year payout (when a participant’s death occurs before the RBD), the election deadline for a 2019 death would be December 31, 2020. This election deadline can be extended to December 31, 2021, by a plan amendment. (Most nonspouse beneficiaries may not elect life expectancy payments if a participant dies in 2020 or a later year.)

Nonspouse QRP Beneficiary Rollover to Elect Life Expectancy Payments

In general, a nonspouse beneficiary must directly roll over an inherited qualified retirement plan balance to an IRA by the end of the year following the year of death to be eligible to elect life expectancy payments if a plan mandates a 5-year payout. For a participant who died in 2019, this deadline is now 2021, not 2020. (Most nonspouse beneficiaries may not elect life expectancy payments if a participant dies in 2020 or a later year.)

RMD Suspension and the Required Beginning Date

The RBD for an individual to begin withdrawing RMDs is generally April 1 of the year following the year she reaches age 72 (formerly 70 ½), or—if delayed beyond this age by continuing employment—the year of retirement. The 2020 RMD waiver does not affect an individual’s RBD.

2020 Initial RMD With April 1, 2021, RBD, is Waived

A retirement plan participant whose first RMD year is 2020 (the participant reached age 70½ in 2019 or earlier, participates in a plan that allows a delayed RBD, and retires in 2020) has an RBD of April 1, 2021, but is not required to withdraw this amount in 2021. The 2021 RMD, however, must be withdrawn by December 31, 2021. Amounts that are withdrawn in 2021 will be applied to satisfy this 2021 RMD, and any amount in excess of this 2021 RMD will be eligible for rollover.

No Other Deadline Extensions or Rollover Modifications

No deadlines are extended other than the deadlines to 1) complete certain rollovers or repayments (August 31, 2020), 2) elect life expectancy payments or the 5-year rule if a participant died in 2019 (December 31, 2021, if a retirement plan offers both options), and 3) allow a nonspouse beneficiary of a participant who died in 2019 to complete a direct rollover to an IRA and elect life expectancy payments (December 31, 2021).

Spousal Consent and Suspension of 2020 RMDs  

If an individual is receiving certain annuity payments (e.g., qualified joint and survivor annuity) from a qualified plan, the suspension for 2020 and resumption in 2021 would not require spousal consent unless the plan provides that there is a new annuity start date.

Rollover to Distributing Plan

Amounts withdrawn from a retirement plan that are eligible for rollover by virtue of the RMD waiver may be rolled back into the same plan if that plan permits rollovers and if other rollover conditions are met.

RMD Waiver and Withholding

Payors do not have the option to treat a 2020 RMD amount paid from a retirement plan as subject to 20% withholding. But if an amount exceeding the calculated 2020 RMD is distributed, and would otherwise be eligible for rollover, it is subject to 20% withholding.

If the individual is receiving monthly distributions that exceed RMD amounts, as part of a series of payments made over a period of 10 or more years, the entire amount of each distribution is subject to the periodic payment optional withholding rules (IRC Sec. 3405(a).

Substantially Equal Periodic Payments and the RMD Waiver

Substantially equal periodic payments—exempt from the 10% early distribution penalty tax—are not affected by the RMD waiver. Required payments under such a schedule—even if based on the RMD calculation method—must be made if required in 2020, or all prior payments received under this schedule are subject to the 10% early distribution penalty tax.

Financial Organizations Must Notify IRA Owners  

Financial organizations must notify their IRA clients that no RMD is due for 2020. One method of notification is to provide IRA owners with a copy of the 2019 Form 5498, IRA Contribution Information, that was filed with the IRS, indicating that there is no RMD required for 2020 (the extended IRS filing deadline for the 2019 Form 5498 is August 31, 2020).

Defined Benefit Plans and the 2020 RMD Waiver

The waiver of 2020 RMDs does not apply to defined benefit pension plans, even if such plans use a formula that calculates the RMD as if it is a distribution from an individual account plan.

 


DOL Issues Regulations Prescribing Conditions for ESG Investments in Retirement Plans

The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued proposed regulations intended to govern the use of so-called “socially responsible” investments in retirement plans. Investments considered to have these characteristics are officially called environmental, social, and governance (ESG) investments. This guidance is being widely viewed as advising greater caution when retirement plan fiduciaries consider ESG investments for their retirement plans.

In general terms, ESG investments involve investment strategies that take into account environmental, social, and governance factors. Investors in such funds or strategies may do so with the motive of investing in entities that—for example—are considered environmentally responsible, or that support certain social causes.

EBSA has a history of issuing sub-regulatory guidance on the use of ESG investments as options for retirement plans, because of employers’ fiduciary obligation to administer their plans in a manner that places the interests of participants and their beneficiaries above other considerations. Prior EBSA guidance has generally taken the form of Interpretive Bulletins, the latest being IB-2016-1.

EBSA policy towards ESG investments in retirement plans has tended to reflect the philosophy of the administration in power. IB 94-2, issued during President Bill Clinton’s administration, asserted that—while selecting investments to achieve social objectives does not justify inferior returns for plan participants and beneficiaries, considering ESG factors was acceptable as a “tie-breaker” in investment selection.

IB-94-2 was viewed by the succeeding administration of President George Bush as unduly encouraging fiduciaries to include social, environmental, or political considerations in plan investment decisions, and it was replaced by IB 2008-2. To continue the swing of the pendulum, IB-2015-1 and IB-2016-1—issued during President Barack Obama’s administration—expressed an intention to revert to the less cautionary tone of EBSA’s guidance issued under President Clinton.

Now, under President Donald Trump’s administration, EBSA has gone beyond sub-regulatory Interpretive Bulletins by issuing proposed regulations. Public comments will be accepted for a 30-day period following the guidance’s publication in the Federal Register. Elements of these proposed regulations in prepublication form, and as articulated in an EBSA news release, include the following.

  • Fiduciaries may not invest in an ESG if they understand that its underlying investment strategy would give less priority to investment returns, or would increase investment risk, for the sake of a nonfinancial objective.
  • Compliance with ERISA’s exclusive-purpose and loyalty duties prohibits fiduciaries from subordinating the interests of plan participants and beneficiaries in retirement income and financial benefits under the plan to nonfinancial goals.
  • The regulations describe required investment analysis and documentation for what EBSA describes as “the rare circumstances” when fiduciaries are choosing among investments that are truly “indistinguishable” from one another—investments essentially equal—from an economic standpoint.
  • The proposed regulations state that “The Department does not believe that investment funds whose objectives include non-pecuniary [i.e., ESG] goals …even if selected by fiduciaries only on the basis of objective risk-return criteria…should be the default investment option in an ERISA plan.”

 

 


IRS Issues Tax-Related Deadline Relief for Tornado Victims in Parts of South

The IRS has issued News Release IR-2020-126, announcing an extension of time to complete filing of returns and making tax payments as a result of April tornadoes, severe storms, and flooding that took place in parts of Mississippi, Tennessee, and South Carolina. At this time, areas included are Clarke, Covington, Grenada, Jasper, Jefferson Davis, Jones, Lawrence, Panola, and Walthall counties in Mississippi; Bradley and Hamilton counties in Tennessee; and Aiken, Barnwell, Berkeley, Colleton, Hampton, Marlboro, Oconee, Orangeburg, and Pickens counties in South Carolina. Under this guidance, certain tax-related acts with deadlines falling on or after April 12, 2020, have been extended to October 15, 2020. (This guidance is in addition to the nationwide coronavirus-related relief already available to taxpayers for time-sensitive tax act completions that are due on or after April 1, 2020, and before July 15, 2020, which are extended through July 15.

IR-2020-126 specifically notes that this extension applies to IRA contributions. This news release, however, does not specifically appear to address or include other time-sensitive acts described in Treasury Regulation 301.7508A-1(c)(1), such as completion of rollovers, recharacterizations, or correction of excesses., that have been granted in other disaster relief. Additional guidance with respect to these tax-related acts may be forthcoming.

This relief applies to residents of the identified area, to those whose businesses or records necessary to meet a covered deadline are located there, and to certain relief workers providing assistance following the disaster events.

Affected taxpayers who reside or have a business located outside the covered disaster area are required to call the IRS disaster hotline at 1-866-562-5227 to request relief.


More Details on CARES Act Eligibility and Plan Loan Guidance

The retirement industry eagerly received the IRS guidance on applying provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act with the issuance of Notice 2020-50 on June 19. It has provided important details on compliance with this legislation—which offers financial and tax relief to millions of Americans affected by the coronavirus (COVID-19) pandemic.

The CARES Act was signed into law on March, 27, 2020, as the largest emergency relief package in U.S. history. It offers a variety of potential benefits to those who participate in tax-favored retirement savings arrangements. The legislation not only grants special access to the tax-favored accounts of many who may need it, but also provides a pathway to later repayment. For amounts up to $100,000, there is an exemption from the 10 percent penalty tax for early distributions from a retirement plan, three-year ratable taxation of amounts distributed, and a three-year repayment option for those who qualify.

Although there has been comparable legislation for past disaster events—notably, Hurricane Katrina in 2005—still there has been some uncertainty as to how closely CARES Act procedures might ultimately mirror it. Notice 2020-50 now provides greater clarity and is to be followed in applying CARES Act provisions.

Following are some of the more significant highlights of Notice 2020-50.

 

CORONAVIRUS-RELATED DISTRIBUTIONS

Qualified Individual Definition Expanded

Notice 2020-50 broadened the definition of who is eligible for a coronavirus-related distribution (CRD)—and therefore eligible for CARES Act tax benefits.

Initial guidance defined a “qualified individual” as

  • an individual (or the spouse or dependent of the individual) who is diagnosed with the COVID-19 disease or the SARS-CoV-2 virus in an approved test; or
  • an individual who experiences 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 reduced hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Treasury Secretary.

Notice 2020-50 adds new circumstances to the definition of “qualified individual.”

  • An individual who has experienced a reduction in pay (or self-employment income) due to COVID-19, or has had a job offer rescinded or a start date for a job delayed due to COVID-19.
  • An individual whose spouse or a member of the person’s household has
    • been quarantined, furloughed or laid off, or had work hours reduced due to COVID-19;
    • been unable to work because of a lack of childcare due to COVID-19,
    • had a reduction in pay (or self-employment income) due to COVID-19; or
    • had a job offer rescinded or a start date for a job delayed due to COVID-19.
  • An individual whose spouse or a member of the person’s household has experienced the closing or a reduction of hours of their business due to COVID-19.

For purposes of applying these additional factors, a member of the individual’s household is someone who shares the individual’s principal residence.

Timing

A CRD was defined in the statute as an amount distributed from a retirement account on or after January 1, 2020, and before December 31, 2020. Notice 2020-50 affirmed that a distribution taken on December 31, 2020, would not be a CRD.

Who Can and Cannot Recontribute CRDs

A CRD can be taxed ratably over three years, and generally can be recontributed to an eligible retirement plan within three years. However, Notice 2020-50 makes clear that while beneficiaries of retirement plans and IRAs may be taxed in this manner, only spouse beneficiaries may make recontributions.

Employer May Choose Whether to Allow CRDs, Other CARES Act Options

Employers can choose to allow participants in their retirement plans (other than pension plans) to take CRDs even without otherwise having a distributable event, if they are qualified individuals, up to $100,000 of their vested balance.

Notice 2020-50 makes clear that employers are not required to offer CRDs to participants. If they do, they are not required to implement all elements of CARES Act relief, such as enhanced retirement plan loan amount or available loan suspension options.

Reliance on Employee Certification

Employers that offer retirement plan CRDs are allowed to rely on an employee-participant’s certification that he is a qualified individual, unless the employer has actual knowledge to the contrary. Notice 2020-50 states that an employer is under no obligation to “inquire into whether an individual has satisfied the conditions” of eligibility.

Sample Employee Certification Provided

Notice 2020-50 includes a sample of what the IRS considers “an acceptable certification.”

Reporting/Coding

If an employer has adopted provisions allowing CRDs, they will be reported on IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc. Notice 2020-50 states that for CRDs made to participants (other than beneficiaries) who are otherwise subject to the 10 percent early distribution penalty tax, Code 2, Early distribution, exception applies, may be used. Alternatively, Code 1, Early distribution, no known exception, may be used. (A qualified individual can claim exemption from the 10 percent penalty tax on his individual income tax return if he qualifies for a CRD, regardless of how Form 1099-R is coded.)

Reliance on Employee Certification for Recontributions

Employers that allow recontributions of CRDs are allowed to rely on an employee-participant’s certification that she is a qualified individual, unless the employer has actual knowledge to the contrary.

Taxpayer Reporting

A qualified individual will report CRDs as distributions and as repayments—if made—on new Form 8915E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments. This is a form in the same series used for certain prior disaster events, such as Hurricane Katrina. A taxpayer can claim CRD status even if distributions were received from a retirement plan whose sponsoring employer did not elect to add CRDs as a distributable event.

Examples of Tax Treatment

Notice 2020-50 provides several examples of tax impacts when both CRDs and repayments occur. These include amending a prior year’s tax return to account for recontributions made later in the three-year ratable taxation period, and choosing to carry forward or carry back—to future or prior years—the tax impact of a repayment that is made during the three-year ratable taxation period.

No Modification of Substantially Equal Periodic Payments

A CRD received by an eligible individual is not to be considered a modification of a series of substantially equal periodic payments as an exemption from the 10 percent early distribution penalty tax.

 

PLAN LOANS

Deadline to Take Plan Loan Confirmed

Notice 2020-50 confirmed that the final day to take a CARES Act retirement plan loan, including the enhanced loan amount, is September 22, not September 23.

Plan Loan Suspension Safe Harbor

Notice 2020-50 provides a safe harbor for loan repayment when a loan payment suspension is permitted by the employer under CARES Act provisions. Among its conditions: loan payments must resume at the end of the suspension period; the loan’s term may be extended up to one year from the date originally required to be repaid; interest accrued during the suspension period must be added to the remaining loan principal amount; and the loan must be reamortized and repaid in substantially level amounts over the remaining period of the loan.

Notice 2020-50 recognizes that there may be other reasonable interpretations of the CARES Act loan provisions in addition to the Notice’s safe harbor.

Participant Certification as Eligible Individual

Employers that adopt the CARES Act enhanced loan provisions are allowed to rely on an employee-participant’s certification that he is an qualified individual, unless the plan administrator has actual knowledge to the contrary.

 


IRS Issues More Guidance on Waived 2020 Required Minimum Distributions (RMDs)

The IRS has issued Notice 2020-51, providing additional guidance on the 2020 suspension of RMDs that generally must be taken annually by IRA owners, retirement plan participants, and beneficiaries.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, signed into law by President Trump on March 27, 2020, suspended for the 2020 tax year the general requirement that annual distributions must be taken from tax-favored retirement plans and IRAs when an account owner reaches RMD age, or annually by some account beneficiaries. The timing was problematic for some, who—before the CARES Act enactment—had already in 2020 taken distributions they believed to be required, but under the waiver are not.

Among the details provided in Notice 2020-51 are the following:

  • Extends the normal 60-day rollover period to permit repayments through August 31, 2020, of waived 2020 RMD amounts
  • Allows repayments without regard to the one-per-12-month rollover limitation
  • Permits repayment by nonspouse beneficiaries of waived 2020 required distributions—these repayments will not violate the statutory prohibition on nonspouse indirect (60-day) rollovers
  • Provides a sample plan amendment for defined contribution plans
  • Includes a 12-item question-and-answer section related to the 2020 RMD waiver

 


IRS Issues More CARES Act Eligibility and Plan Loan Guidance

The IRS has issued Notice 2020-50, providing additional guidance on several aspects of the Coronavirus Aid, Recovery, and Economic Security (CARES) Act, legislation enacted in March of this year in response to the coronavirus (COVID-19) pandemic.

A “qualified individual” who has experienced health or financial effects from the COVID-19 pandemic is eligible for certain retirement plan distribution, penalty exemption, plan loan and loan repayment, taxation, and repayment benefits.

Qualified Individual Further Defined

Initial guidance defines a “qualified individual” as

  • an individual (or the spouse or dependent of the individual) who is diagnosed with the COVID-19 disease or the SARS-CoV-2 virus in an approved test; or
  • an individual who experiences 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 reduced hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Treasury Secretary.

Notice 2020-50 adds new circumstances to the definition of “qualified individual.”

  • An individual who has experienced a reduction in pay (or self-employment income) due to COVID-19, or has had a job offer rescinded or a start date for a job delayed due to COVID-19.
  • A person whose spouse or a member of her household has
    • been quarantined, furloughed or laid off, or had work hours reduced due to COVID-19;
    • been unable to work because of a lack of childcare due to COVID-19,
    • had a reduction in pay (or self-employment income) due to COVID-19; or
    • had a job offer rescinded or a start date for a job delayed due to COVID-19.
  • A person whose spouse or a member of her household has experienced the closing or a reduction of hours of their business due to COVID-19.

For purposes of applying these additional factors, a member of the individual’s household is someone who shares the individual’s principal residence.

CARES Act Loans

Notice 2020-50 provides examples of how to apply the special plan loan provisions of the CARES Act, and includes a safe harbor method. In addition, the Treasury Department and IRS recognize that there may be additional reasonable ways to administer loan repayments under the CARES Act.

This guidance is being further analyzed, and additional details will be shared.