The American Retirement Association (ARA) has been working with lawmakers and federal agencies to provide a series of measures intended to provide relief for American taxpayers and retirement plan beneficiaries who are dealing with unique financial hardships due to the COVID-19 pandemic.
The ARA is working with legislators to write legislation that would provide a relief waiver geared toward individuals living in a “hot spot” area where coronavirus infections run relatively rampant and that has suffered economic losses. Also, individuals who are unable to repay loans would be allowed to pay the income tax associated with their respective defaults over a period of three years, rather than in the single default year.
The legislation would also propose a wage credit geared to support employee retention for businesses significantly affected by the pandemic and allow individuals who borrowed money from their retirement plans to defer their repayments by up to one year.
If enacted, individuals would have a permittance of up to three years to repay distributions and will have an additional 60 days to file their taxes.
The relief packages are being negotiated for inclusion in a third relief package being discussed between Congress, Treasury Secretary Steven Mnuchin, and others. The legislation includes the potential to send direct checks to Americans, payroll tax relief, and a payroll tax holiday.
Plan sponsors with a defined contribution plan would be allowed to suspend their employer contributions to their plan for the remainder of 2020, and sponsors with less than 500 participants would be allowed to waive any employer contributions that haven’t been made to satisfy their 2019 obligations.