The most recent Coronavirus Stimulus Package contains provisions that impact retirement plans and may impact stable value. The stimulus bill was signed into law on the 27th.
The relevant sections are 2202 and 2203 which are attached above, and they include the following:
Temporary Waiver of Required Minimum Distribution Rules. Due to the significant decline in the stock market due to concerns over the COVID-19 pandemic, Congress provided a temporary waiver for calendar year 2020 of the rules for required minimum distribution from defined contribution plans and IRAs. A similar waiver was included in the Worker, Retiree, and Employer Recovery Act of 2008.
Streamline loan procedures and liberalize hardship distribution rules. Congress is allowing participants to have immediate access to some of their retirement accounts and relaxing loan repayment rules to help individuals whose income has been interrupted because of the emergency. These additional withdrawal opportunities are only available if the plan currently permits loans/withdrawls or adopts them. They are limited to individuals who tested positive, who had a spouse or dependent test positive, or who experienced other negative economic consequences related to the pandemic.
- Waives the Section 72(t) additional ten percent tax on early withdrawals from retirement plans for individuals who have been impacted by the COVID-19 pandemic. Permits individuals 3 years to repay the distribution. Permits individuals to include the distribution in income ratably over three years.
- Doubles the current plan loan limits to the lesser of $100,000 or 100 percent of the participant’s vested account balance in the plan.
- Allows three years to repay income tax associated with a loan default.
- Allows individuals who borrow from their plan and have a repayment due during the months following the COVID-19 outbreak to delay their loan repayment for up to one year.
These provisions are consistent with those advocated by retirement-focused trade associations including SVIA, which have been provided in other emergencies such as after 9/11, the financial crisis and natural disasters.