On Friday, March 27, 2020, the Federal government enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide economic relief for the devastation resulting from the current COVID-19 pandemic. The largest spending law in US history, the CARES Act includes provisions that directly impact individuals and businesses on numerous levels. This overview presents our interpretation of the Act’s various individual provisions.


Under the CARES Act, individuals are allowed a distribution called Coronavirus-Related Distributions (CRD). A CRD is a distribution of up to the lesser of $100,000 or 100% of the vested account balance.

Individuals eligible for the CRD include:

  • Those who are diagnosed with Coronavirus
  • Those whose spouse or dependent is diagnosed with Coronavirus
  • Those who experience adverse financial consequence as a result of:
    • Having been quarantined
    • Having been furloughed or laid off
    • Having reduced working hours
    • Being unable to work due to lack of childcare
    • Closing or reduced hours of business owned or operated by the participant
    • Other factors determined by the Secretary of the Treasury

The CRD’s are exempt from the 10% early withdrawal penalty for distributions made prior to age 59 ½.  The CRD’s are included in the participant’s income ratably over 3 taxable years unless the participant elects to include the entire CRD in the year of the distribution. Participants have up to 3 years from the day after the participant received the distribution to repay all or a portion of the CRD. Any repayment must be made to a retirement plan that accepts rollover contributions. CRD amounts that are repaid will not be treated as taxable income.

The CARES Act also provides relief to plan participants who are affected by COVID-19 as noted above by allowing participants to take out larger loans from their accounts. For the period March 27, 2020 through September 23, 2020, affected participants may take loans from their accounts up to the lesser of 100% of their vested account balance or $100,000. For affected participants who have a loan repayment due between March 27, 2020 and December 31, 2020 on an outstanding loan, the payment due date is delayed one year. Any subsequent repayments with respect to the loan will be adjusted accordingly to reflect the one-year extension and any interest which accrues during the one-year extension can also be deferred. The five-year mandatory repayment period that usually applies is disregarded during this period.


The CARES Act provides relief to defined contribution plan and IRA participants by waiving minimum plan distributions that would otherwise be required to be made in 2020. This waiver applies to all taxpayers and is not limited to those participants impacted by COVID-19.

If you have already received your 2020 required minimum distribution (RMD), you have up to 60 days from the date of the distribution to return a distribution to an IRA or deposit it into another qualified retirement account. However, you can only return a distribution or deposit to another qualified retirement account once in a 365-day period.


The CARES Act provides that beginning in 2020, qualified charitable contributions are not to exceed $300 as an above-the-line deduction for individuals who do not itemize deductions. For individuals who itemize deductions, the limitation based upon adjusted gross income (“AGI”) for the charitable contribution deduction has been temporarily suspended for qualified charitable contributions in 2020.

Qualified contributions are defined by the IRS for both individuals who do not itemize deductions and for those who do itemize deductions as “cash contributions made in 2020 to churches, nonprofit education institutions, nonprofit medical institutions, public charities or any other organization.”. Qualified contributions do not include contributions made to private foundations or new or existing donor advised funds.


The CARES Act excludes payments made before January 1, 2021 by an employer to either an employee or a lender to be applied toward an employee’s student loan from an employee’s taxable income for payments of up to $5,250. The $5,250 cap applies to the new benefit for student loan repayment assistance and other educational assistance already provided, such as tuition, fees and books.  Any excess of benefits is subject to income and employment taxes. No deduction is allowed for payments made by the employer that are excluded from the employee’s income.