As a result of the Coronavirus Aid, Relief and Economic Security (CARES) Act that was enacted on March 27, 2020 there have been changes to participant loans
Participant Loan Changes
For a qualified individual (as described above), the following changes are made to the rules for participant loans:
- Temporary Higher Limits: For the 180 days following March 27, the limit for participant loans will be increased to the lesser of $100,000 or 100% of vested account. Ordinarily the limit equals the lesser of $50,000 or 50% of the vested account
- Extended Due Dates: Any loan repayment due during 2020 can be delayed for one year with subsequent repayments being appropriately adjusted for accrued interest
Similar to the changes for in-service distributions, a plan sponsor has the option to adopt these changes and has at least until the last day of the plan year beginning during 2022 to formally amend their plan document.
