Notice 2020-50 explains that coronavirus-related distributions generally are treated as satisfying plan distribution restrictions.

Under Notice 2020-50, an employer may expand the distribution options under its plan to allow an amount attributable to a plan contribution (such as an elective, qualified nonelective, qualified matching, or safe harbor contribution) under a qualified cash or deferred arrangement to be distributed as a coronavirus-related distribution even though it is distributed before an otherwise permitted distributable event.

Notice 2020-50 clarifies that the CARES Act does not change the rules for when plan distributions are permitted to be made from employer retirement plans; a qualified retirement plan is not permitted to make a distribution before an otherwise permitted distributable event merely because the distribution would qualify as a coronavirus-related distribution.

The Notice also states that a pension plan is not permitted to make a distribution under a distribution form that is not a qualified joint and survivor annuity without spousal consent merely because the distribution could be treated as a coronavirus-related distribution (see Standard Document, Qualified Joint and Survivor Annuity (QJSA) Notice).

Under Notice 2020-50, coronavirus-related distributions from a retirement plan are not subject to the rules for eligible rollover distributions under Code Sections 401(a)(31), 402(f), and 3405 (26 U.S.C. §§ 401(a)(31), 402(f), and 3405), which means that the plan (or plan administrator) is not required to:

However, a coronavirus-related distribution is subject to the voluntary withholding requirements of Code Section 3405(b) and Treasury Regulation Section 35.3405-1T (26 C.F.R. § 35.3405-1T).

Under the CARES Act and Notice 2020-50, employers are permitted to choose whether, and to what extent, to:

This means that an employer may choose to provide for coronavirus-related distributions but choose not to change its plan loan provisions or loan repayment schedules. An employer (or plan administrator) is permitted to develop any reasonable procedures for identifying which retirement plan distributions are treated as coronavirus-related distributions under its retirement plans, but if any distribution of an amount subject to Code Sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), or 457(d)(1)(A) is treated as a coronavirus-related distribution, the plan must be consistent in its treatment of similar distributions (26 U.S.C. §§ 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), or 457(d)(1)(A)).

The Notice provides that even if a retirement plan distribution is not treated as coronavirus-related, a qualified individual may treat a distribution that meets the requirements of the Notice as a coronavirus-related distribution on the individual's federal income tax return.

The Notice clarifies that the total amount of coronavirus-related distributions from all of an employer's retirement plans to a qualified individual is not permitted to exceed $100,000. This refers to the employer maintaining the plan and the members of its controlled group. However, a plan will not violate this rule if a qualified individual's total coronavirus-related distributions exceed $100,000 and those distributions come from IRAs or other eligible retirement plans maintained by unrelated employers.

A retirement plan administrator may rely on an individual's certification that the individual satisfies the conditions to be a qualified individual in determining whether a distribution is a coronavirus-related distribution, unless the administrator has actual knowledge to the contrary.

The administrator does not have an obligation to inquire into whether an individual has satisfied the conditions under Section 2202 of the CARES Act to be a qualified individual; the actual knowledge requirement is limited to situations in which the administrator already possesses sufficiently accurate information to determine the truth of a certification. However, an individual may treat the distribution as a coronavirus-related distribution on his or her federal income tax return only if the individual actually is a qualified individual under the CARES Act.

The Notice provides an example of an acceptable certification.

To implement the provisions of Section 2202 of the CARES Act, an employer must amend its plan by:

These dates may be extended in future guidance from the IRS.

Notice 2020-50 provides a safe harbor providing that suspensions of payments and extensions of loan terms will be treated as satisfying Section 2202(b)(2) of the CARES Act. Section 2202(b)(2) delays the repayment due date for certain plan loans for up to one year.

Notice 2020-50 provides a safe harbor for satisfying Section 2202(b)(2) of the CARES Act. Under the safe harbor, a qualified employer-sponsored retirement plan will be treated as satisfying the requirements of Code Section 72(p) (26 U.S.C. § 72(p)) if a qualified individual's obligation to repay a plan loan is suspended under the plan for any period beginning not earlier than March 27, 2020, and ending not later than December 31, 2020.