Although some retirement plan recordkeepers and third-party administrators (TPAs) have reached out to plan sponsors on decisions regarding the optional provisions of the CARES Act, e.g., coronavirus-related withdrawal and loan relief options, others are waiting for additional guidance. Below is a checklist of issues to consider to help you navigate decision-making with respect to optional CARES Act changes and determine whether your TPA has procedures in place to ensure compliance with the CARES Act provisions.

1. Coronavirus-related withdrawal (CRW)

• Will the TPA make available, obtain and retain a participant’s certification that he or she meets the “qualified individual” requirement of the CARES Act regarding CRWs, and keep track of when an eligible participant has reached the maximum amount?

• If you have multiple retirement plans in your controlled group, does the TPA have procedures in place to make sure that the aggregate amount of CRWs to any one participant does not exceed $100,000?

• Does the TPA have procedures in place to treat any CRW repayments as rollover contributions and limit such repayments to the aggregate amount of distributions that the individual received from all retirement plans in your controlled group (if applicable)?

2. Increased loan limit and extension of repayment period

• Will the TPA solicit a participant’s certification that he or she meets the “qualified individual” requirement of the CARES Act regarding plan loans, maintain the participant certification record, proactively communicate each qualified participant’s name to the employer, keep track of when the participant no longer qualifies and communicate the end date to the employer?

• Will the TPA proactively notify the employer whenever the employer should stop collecting 401(k) loan payments from a qualified individual?

• Will the TPA proactively notify the employer whenever the employer should restart collecting 401(k) loan payments from a qualified individual?

• Will the TPA proactively create and communicate to the employer a new loan amortization schedule before loan payments are scheduled to restart?

• Consider whether it makes sense to increase the limit for available plan loans from $50,000 to $100,000: will employees who take out a $100,000 loan be able to repay it over the 5-year repayment period (as extended to consider the period of missed payments), or will permitting that lead to future defaults that will create a severe tax burden for your employees?

• Will the TPA properly document any delayed loan repayments to ensure that such loans are not treated as being in default?

• Will the TPA treat a loan that defaulted in 2020 as a CRW if the participant is a qualified individual and his defaulted loan was offset against his or her account?