SECURE & CARES Act Retirement Plan Provisions

March 31, 2020

In late 2019 Congress passed the SECURE Act and last week passed the stimulus billed titled the CARES Act. Both contain important provisions that relate to Company and Individual Retirement Plans. Of interest to most are the following changes.

Required Minimum Distribution (RMD) beginning age changed from age 70 ½ to 72. This effects any individual who had not turned at least 70 ½ by January 1, 2020. So, from January 1, 2020 on the date one must begin taking distributions from their IRA, 403(b) or 401(k) Plan is by the April 1 following the year in which they turn age 72. An exception applies to those that work beyond age 72 and are not a 5% or more owner of the company for which they work. In that case an individual may delay their RMD until the year that they retire. This exception does NOT apply to IRA’s where the age 72 applies without regard to whether you are working.

Special Rule for RMD’s for the year 2020. Under the CARES Act Required Minimum Distributions have been waived. Your RMD is based on the balance in your IRA or 401(k) as of the end of the prior calendar year, December 31, 2019. Since the stock market has fallen Congress determined it would not be appropriate to force distributions based on that higher balance and therefore, they suspended the RMD’s for this year.

10% penalty for early withdrawals from IRA’s and 401(k) plans are waived for any distribution taken between January 1, 2020 and December 31, 2020. This applies to distributions of up to $100,000.

Mandatory 20% income tax withholding on distributions from 401(k) Plans is suspended for this year.

Income taxes on coronavirus related distributions can be paid over a 3-year period and can be paid back to the 401(k) or IRA within that period.

In Service distributions from 401(k) Plans are allowed for coronavirus related reasons. These reasons include:

  • You, your Spouse or dependent has been diagnosed with the coronavirus
  • You have experienced adverse financial consequences as a result of being quarantined, furloughed or laid off, or your hours were reduced
  • You are unable to work because of lack of childcare
  • You had to close or reduce the hours of a business as a result of the virus
  • You are financially impacted by other factors as will be determined by the Secretary of the Treasury


Loans limits from 401(k) and Company Retirement Plans’ increased from the lessor of $50,000 or ½ f your vested balance to $100,000 or 100% of your vested account balance.

To read the CARES Act in its entirety please visit