The CARES Act: IRA’s and Employer-Sponsored Plans

The CARES Act: IRA’s and Employer-Sponsored Plans

by George Holland on April 21, 2020 The All-Weather Investor

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act included some significant items that not only impact small businesses but also have some changes for IRA’s and employer-sponsored retirement plans.  You will need to bring these up to your CPA/tax advisor and/or your company retirement plan administrator, but we wanted to pass along some of the topics that might affect you.

2019 IRA/Roth Contribution Deadline Extended to July 15th

Normally, one has until April 15th each year to make a contribution to their IRA or Roth account for the previous tax year.  The CARES Act extended the tax-filing deadline, and the ability to make 2019 IRA or Roth Contributions, to July 15th.

No Required Minimum Distributions (RMD’s) for 2020

If you have been taking RMD’s from your traditional or inherited IRA (or even from a 401k, 403(b), or 457 company retirement plan), or if you were scheduled to begin RMD’s this year, the CARES Act allows you to skip that requirement for 2020.

If you already took all or part of your RMD this year and are interested in putting some or all of that money back into your account, the IRS has issued guidelines that may make it possible for that to happen.

Pre-59 ½ Early Withdrawal Penalty Waived for Coronavirus-Related Distributions

The CARES Act also includes provisions, for those who qualify according to certain criteria, to possibly take distributions from their IRA or employer-sponsored retirement plan of up to $100,000 during 2020 and avoid what would normally be a 10% penalty for those who are below the age of 59 ½.

Employer Sponsored Retirement Plans

In addition to the effects on individuals, the CARES Act also included some provisions that affect employers/business owners with qualified retirement plans such as 401ks or Cash Balance/Defined Benefit plans.  These provisions pertain mostly to the extension of deadlines for filings and funding requirements and the ability of plan participants to access account monies either through distributions or plan loans.

We hope this helps you to at least identify some potential benefits of the CARES Act that you can explore in greater detail.


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About the Author

George Holland joined Billeaud Capital Management in 2009. Since entering the investment advisory business in 1989, George has provided independent investment and financial advisory services to individual clients, as well as holding management positions at an independent trust company, a broker dealer/investment advisory firm, and running his own investment advisory business. George earned a B.A. degree in Economics and a Masters in Business Administration from Louisiana State University…. Read more.