eligible retirement plans (as defined in section 402(c)(8)(B) of the Code). A coronavirus-related distribution is any distribution from an eligible retirement plan made on or after January 1, 2020, and before December 31, 2020, to a qualified individual. A coronavirus-related distribution is not subject to the additional tax under section 72(t), generally is includible in income over a 3-year period, and, to the extent the distribution is eligible for tax-free rollover treatment and is recontributed to an eligible retirement plan within a 3-year period, is not includible in income. Section 2202 of the CARES Act also increases the allowable plan loan amount under section 72(p) of the Code and permits a suspension of payments for plan loans made to qualified individuals that are outstanding on or after March 27, 2020. See Notice 2020-50, 2020-28 IRB 35, for a detailed description of this relief, including a discussion of related plan amendment deadlines.
Under section 2202(c) of the CARES Act, an eligible retirement plan will not be treated as failing to operate in accordance with its terms merely because the plan implements the provisions of section 2202, or any regulations thereunder, if the plan is amended within a prescribed time period and the amendment applies retroactively to the beginning of the period. The period begins on the date that section 2202 (or any regulation thereunder) takes effect, and ends on or before the earlier of (1) the date the amendment is adopted, or (2) the last day of the first plan year beginning on or after January 1, 2022 (or January 1, 2024, in the case of a governmental plan within the meaning of section 414(d) of the Code), or a later date prescribed by the Secretary of the Treasury or the Secretary’s delegate (Secretary). A plan satisfying these conditions will not fail to meet the requirements of section 411(d)(6) of the Code and section 204(g) of ERISA by reason of that amendment, except as provided by the Secretary.
- B. Section 302 of the Relief Act
Section 302 of the Relief Act, enacted on December 27, 2020, provides favorable tax treatment to qualified individuals with respect to qualified disaster distributions from eligible retirement plans (as defined in section 402(c)(8)(B) of the Code). In general, section 302 of the Relief Act provides qualified individuals favorable tax treatment that is similar to that provided by section 2202 of the CARES Act; however, the relief provided by section 302 of the Relief Act differs from the relief provided by section 2202 of the CARES Act in certain respects. For example, (1) section 302 of the Relief Act provides favorable tax treatment with respect to qualified disaster distributions, which are defined generally as distributions from an eligible retirement plan that are made on or after the date a disaster begins (no earlier than December 28, 2019) and before June 25, 2021, to a qualified individual; (2) the relief granted by section 302 permits a qualified individual, under certain circumstances, to recontribute a qualified distribution that was made to purchase or construct a principal residence in a qualified disaster area but was not so used on account of the qualified disaster; and (3) section 302 does not provide relief with respect to amendments to a plan from the anti-cutback requirements of section 411(d)(6) of the Code and section 204(g) of ERISA. See Form 8915-F, Qualified Disaster Retirement Plan Distributions and Repayments, and related instructions, for a detailed description of relief provided with respect to qualified disaster distributions and repayments, including relief provided under section 302 of the Relief Act.
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