Retirement Plan Provisions of the CARES Act

John Csargo

The COVID-19 generated CARES Act contains provisions for retirement plan distributions and qualified individuals affected by the coronavirus. Details follow on each of these 5 provisions.


  1. Year 2020 distributions attributable to coronavirus are exempt from the 10% premature distribution penalty 
  2. Coronavirus distributions can be contributed back to a retirement plan within three years and be deemed a tax-free rollover. 
  3. Tax on the coronavirus distribution will be paid ratably over 3 years (unless taxpayer elects to include in distribution year) 
  4. Retirement plans have additional flexibility for plan loans for coronavirus . Provisions applicable regardless of coronavirus impact: 
  5. Required minimum distribution requirements are waived for 2020 


CARES Act removes 10% additional tax for coronavirus-related retirement plan distributions 

  • A distribution from a retirement plan is subject to a 10% additional tax unless the distribution meets an exception such as over 59 ½ or older or several other exceptions.   
  • The CARES Act provides a new exception.  The 10% additional tax does not apply to any coronavirus-related distribution, up to $100,000. 
  • A coronavirus-related distribution is any distribution (subject to dollar limits discussed below), made on or after January 1, 2020, and before December 31, 2020, from a retirement plan to a qualified individual.  

A qualified individual is an individual 

who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention (CDC)

whose spouse or dependent is diagnosed with such virus or disease by such a test, or 

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 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. 

  •  The administrator of a retirement plan may rely on an employee’s certification that the employee satisfies the conditions of (3) above in determining whether any distribution is a coronavirus-related distribution. 



CARES Act provides the ability to contribute back to the distribution to a retirement plan. 

  • A coronavirus related distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received may be made in one or more contributions in an aggregate amount not to exceed the distribution to a retirement plan.
  • The amount of the contribution will be treated as having received the coronavirus related distribution in an eligible rollover distribution as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (i.e. the amount will not be taxable) 


CARES Act distributions can be included in income over three years 

  • Coronavirus related distribution, unless the taxpayer elects not to, will be included ratably over the 3-taxyear period beginning with such tax year. You can choose to take the entire distribution into income in 2020 if you prefer. 


CARES Act and plan loans 

  • The CARES Act provides flexibility for loans from certain retirement plans for coronavirus-related relief for distributions made on or after January 1, 2020, and before December 31, 2020.   


CARES Act – RMD requirement waived for 2020 

  • In general, the tax code requires a retirement plan or IRA owner to take required minimum distributions (RMDs) annually once the owner reaches age 72.   The CARES Act provides that the RMD requirements do not apply for calendar year 2020 for RMDs.  The waiver does not apply to 2019 RMDs that were permitted to be made prior to April 15th, 2020. 


For more information on these retirement provisions and other aspects of the CARES Act, contact John Csargo, CPA, at


CARES Act – Education Related Provisions


Is My Rent or Mortgage Payment Still Due?