PLANADVISER - January/February 2022 - 36

improving outcomes / emergency funds
Life Happens
When participants have no choice but to draw from their retirement plan
A
ny retirement plan adviser will insist it is a cardinal
sin for participants to dip into their defined contribution
(DC) plan account before they reach retirement
age. But sometimes life's unexpected events put
people in a position where they need money now and their
retirement savings is the only available resource to mine.
When the COVID-19 pandemic proved to be such an
unexpected event, Congress, in March 2020, passed the
Coronavirus Aid, Relief and Economic Security (CARES)
Act. The act provided for expanded distribution options and
favorable tax treatment for up to $100,000 of COVID-related
distributions from DC plans, such as 401(k)s and 403(b)s,
and individual retirement accounts (IRAs), if an employer
chose to adopt this expanded distribution.
The CARES Act also increased the limit on how much
qualified individuals could borrow from their retirement
plan and allowed the sponsor to give them up to an additional
year to repay the loans. Those who took a distribution
under the CARES Act have been given three years to pay the
federal taxes, as well as to repay the distribution amount.
" If somebody took $100,000 out and got through the
brunt of the pandemic using only $20,000, they'd have three
years to pay the $80,000 back and would not have to pay
tax on that, " says Matt Cellini, partner and practice lead at
Greenspring Institutional Client Group in Towson, Maryland.
" Certainly that could make sense, and we saw a number of
our clients adopt those provisions of the CARES Act. "
Even so, Cellini says, Greenspring typically advises its
clients to limit opportunities for " plan leakage, " which he
defines as money withdrawn from an account in a way that
will cause permanent capital loss to the account holder. Cellini
says most of Greenspring's clients, on the firm's advice, chose
not to adopt the CARES Act's distribution provisions but only
the loan part, to better preserve their employees' savings.
While the window the CARES Act created closed at
the end of 2020, participants may still encounter any of a
36 | planadviser.com January-February 2022
Art by Simone Virgini
http://www.planadviser.com

PLANADVISER - January/February 2022

Table of Contents for the Digital Edition of PLANADVISER - January/February 2022

The Virtual Reality
Getting to Yes
A Share of the Wealth
The Full View
Life Happens
An Objectivity Lesson
Best Execution Standard
PLANADVISER - January/February 2022 - Cover1
PLANADVISER - January/February 2022 - Cover2
PLANADVISER - January/February 2022 - 1
PLANADVISER - January/February 2022 - 2
PLANADVISER - January/February 2022 - 3
PLANADVISER - January/February 2022 - 4
PLANADVISER - January/February 2022 - 5
PLANADVISER - January/February 2022 - 6
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PLANADVISER - January/February 2022 - 8
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PLANADVISER - January/February 2022 - 13
PLANADVISER - January/February 2022 - 14
PLANADVISER - January/February 2022 - 15
PLANADVISER - January/February 2022 - 16
PLANADVISER - January/February 2022 - 17
PLANADVISER - January/February 2022 - The Virtual Reality
PLANADVISER - January/February 2022 - 19
PLANADVISER - January/February 2022 - 20
PLANADVISER - January/February 2022 - 21
PLANADVISER - January/February 2022 - 22
PLANADVISER - January/February 2022 - 23
PLANADVISER - January/February 2022 - Getting to Yes
PLANADVISER - January/February 2022 - 25
PLANADVISER - January/February 2022 - 26
PLANADVISER - January/February 2022 - 27
PLANADVISER - January/February 2022 - A Share of the Wealth
PLANADVISER - January/February 2022 - 29
PLANADVISER - January/February 2022 - 30
PLANADVISER - January/February 2022 - 31
PLANADVISER - January/February 2022 - The Full View
PLANADVISER - January/February 2022 - 33
PLANADVISER - January/February 2022 - 34
PLANADVISER - January/February 2022 - 35
PLANADVISER - January/February 2022 - Life Happens
PLANADVISER - January/February 2022 - 37
PLANADVISER - January/February 2022 - An Objectivity Lesson
PLANADVISER - January/February 2022 - Best Execution Standard
PLANADVISER - January/February 2022 - 40
PLANADVISER - January/February 2022 - Cover3
PLANADVISER - January/February 2022 - Cover4
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