Having trouble making payments on a loan from a qualified employer pension or retirement plan?
The CARES Act may just have provided you with the perfect solution, allowing you to avoid losing the tax deferral and being subject to the early withdrawal penalty.
The CARES Act temporarily liberalizes the plan loan rules in two key ways:
1) Loan payments that would otherwise be due between March 27, 2020, and December 31, 2020, can be suspended for up to one year. Payments due after the suspension period will be adjusted to reflect interest that accrued during the suspension period.
2) For plan loans made between March 27, 2020, and September 22, 2020, the maximum loan amount can be increased to the lesser of: a) $100,000 minus any existing plan loan balances, or b) 100% of the participant’s vested account balance or benefit.
So if you can’t make payments on a retirement or pension plan loan, due to a loss of income, furlough or other reason, the sooner you contact your plan administrator the better.