Wednesday, April 8, 2020
New Options with CARES Act
From Attorney Jeremiah D. Wood

In a previous e-mail , I explained the different provisions in the CARES Act that apply to your 401(k)/Profit Sharing Plan. These new options are only allowed for individuals who meet specific requirements related to the impact the COVID-19 virus has had on them personally. Briefly, these options are as follows:
 
  1. Participants who are impacted by the COVID-19 virus are allowed to take a distribution of up to $100,000, or their vested account balance if less. This distribution is not subject to the 10% excise tax on early distributions and is available to currently employed participants. The distribution is included in the participant’s income ratably over 3 years, unless elected otherwise, and it may be repaid to the Plan over a 3 year period.
  2. From March 27, 2020, until September 23, 2020, Participants who are impacted by the COVID-19 virus are allowed to take a loan of up to the lesser of (i) $100,000 or (ii) their vested account balance.
  3. If a Participant who is impacted by the COVID-19 virus has any loan repayments due on loans from the plan between March 27, 2020 and December 31, 2020, then these loan repayments are delayed for one year. Such delay applies to loans regardless of their origination date. After the one year delay, the loans are adjusted to take into account any interest that accrued on the loan during the delay, and the typical 5 year repayment period is extend for this delay.

It is important to understand that these are optional provisions for your plan.  Please select Yes or No below. When I hear back from you, if you select yes, then I will send you a summary of material modifications to be provided to your participants. All plans regardless of the election will be required to be amended by the end of 2022 to address these optional provisions, but such amendment will be done by Friday, Eldredge & Clark to the volume submitter plan on which your plan is based.
 
Additionally, the CARES Act waived the 2020 required minimum distribution requirements for defined contribution plans, which includes your plan. Thus, the summary of material modifications will also describe such wavier.
 
If you have any questions or comments regarding the contents of this e-mail, please feel free to reach out to me at jwood@fridayfirm.com

CLIENT RESPONSE NEEDED BELOW
Coronavirus-Related Distributions
Please use the select button to register your response
Yes - We wish to allow Coronavirus-related Distributions under our Plan
No - We DO NOT wish to allow Coronavirus-related Distributions under our Plan
CARES Act Loans
Please use the select button to register your response
Yes - We wish to allow CARES Act Loans under our plan
No - We DO NOT wish to allow Cares Act Loans under our plan






















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Friday, Eldredge & Clark, LLP serves business, non-profit, governmental and individual clients in Arkansas and across the United States. It is one of the oldest law firms in the state and has been the largest Arkansas-based law firm for more than 50 years. The firm has practice areas focusing on General Litigation; Class Action and Business Litigation; Railroad; Labor and Employment; Medical Malpractice; Public Finance; Healthcare; Estate Planning and Probate; Employee Benefits; Real Estate and Commercial Transactions; and Merger and Acquisitions. Friday, Eldredge & Clark has offices in Little Rock, Fayetteville and Rogers, Arkansas.

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