1. CARES Act Provisions Not Extended

Provisions of the CARES Act were not extended past the original sunset dates.  Most notably, the loan suspension provision will not continue into 2021.  Any participant who elected to suspend his or her loan payments under the CARES Act should expect the payments to resume with their first paycheck of the new year.

2. Relief from Partial Plan Termination Rules

The new bill provides a safe harbor relief to employers from partial plan termination rules.  A plan will not be treated as having a partial termination if the number of active participants covered on March 31, 2021 is at least 80% of the number of active participants covered on March 13, 2020.  It is important to note that the 80% figure is based on total headcount, not identical employees.  Avoiding a partial plan termination means not having to fully vest affected participants.

3. Disaster Relief

The package provides disaster relief via distributions and loans for participants that reside in a presidentially declared disaster area, which does not apply to areas declared disasters due to COVID.  As with other disaster relief packages, this increases the distribution/loan amounts up to $100,000 with no penalty, allows for tax inclusion ratably over three years, and allows the amounts to be repaid to a qualified plan or IRA to avoid taxation.