On Friday, June 19 the Internal Revenue Service released Notice 2020-50 to help plan participants affected by COVID-19 take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This notice expands the categories of individuals eligible for these types of distributions and loans and also provides guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.
Notice 2020-50 clarifies that employers can choose whether to implement coronavirus-related distributions and loan rules, and notes that qualified individuals can claim the tax benefits of ccoronavirus-related distribution rules even if plan provisions aren’t changed. Administrators can rely on an individual’s certification that the individual is a qualified individual, but also notes that an individual must actually be a qualified individual in order to obtain favorable tax treatment. Further, Notice 2020-50 provides employers a safe harbor procedure for implementing the suspension of loan repayments otherwise due through the end of 2020, but notes that there may be other reasonable ways to administer these rules.