IRS adds new COVID-19 retirement plan relief FAQ

Tax Hot Topics newsletter The IRS recently updated its frequently asked questions (FAQs) regarding the optional COVID-19 relief measures for qualified retirement plans and individual retirement accounts (IRAs) where individuals can take certain distributions or increased plan loans for COVID-19-related reasons.

Because many employers are laying off workers due to the economic downturn from COVID-19, the IRS added a new FAQ-15 which provides that employees who are terminated but later rehired by the end of 2020 generally will not be considered as having an employer-initiated severance from employment for purposes of determining whether a partial termination has occurred during the 2020 plan year, subject to the particular facts and circumstances of each case. The IRS also referenced Rev. Rul. 2007-43 for more information on partial terminations.

Jeff Martin
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
+1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
+1 202 861 4107

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