The CARES Act: Year-end and beyond

Understand your next steps

As certain provisions under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) expire at year end, the information below details the steps Fidelity is taking to help you and your participants. In addition, there are some actions you may want to take regarding your plan. Please keep in mind, the information is subject to change if there are extensions or modifications to the relevant CARES Act provisions.

As always, if you have questions, contact your Fidelity representative.

1. CARES Act Loan Update

The CARES Act permitted qualified individuals1 who are participants to delay certain plan loan payments until December 31, 2020 without causing the loans to violate the Internal Revenue Code for loans certified by the participant. Additionally, the CARES Act permitted plan sponsors to increase the maximum loan limit for qualified participants to the lesser of 100% of the participant’s vested account balance or $100,000 (reduced by the highest outstanding loan balance in the past 12 months) from all plans of the employer and any related employer from March 27, 2020 through September 22, 2020.


Given that the deferment continues through December 31st, reamortization of loans will begin January 8, 2021 for participants who initiated a CARES Act loan or requested loan deferment.

  • CARES ACT LOANS: In January 2021, Fidelity will reamortize a participant’s outstanding loan balance plus the interest accrued during the deferment period over the term of the loan. We will provide a feedback file, if applicable, with the new loan payment amount. That amount will reflect the outstanding principal balance of the loan, the loan interest rate, the interest accrued during the deferment period, and the maturity date. Participants will be advised when the new amount will be available to view on NetBenefits®.
  • CARES ACT LOAN DEFERMENT:: In January 2021, Fidelity will reamortize a participant’s loan balance plus the interest accrued during the deferment period. The term of the loan will be extended by the length of the deferment period. We will provide a feedback file, if applicable, with the new loan payment amount. That amount will reflect the outstanding principal balance of the loan, the loan interest rate, the interest accrued during the deferment period, and the maturity date. Participants will be advised when the new amount will be available to view on NetBenefits.

For a sample of the participant communication for both groups, click here. The communication will be sent in the following hierarchy: employee-provided email address; employer-provided email address, with print backup.

Participants making loan payments using automated clearing house transactions (ACH) are responsible for ensuring their ACH information is current and that their payments begin on a timely basis. Fidelity will notify them of the reamortized ACH loan payment amounts after the deferment period ends and prior to the payment start date. We will employ a multi-touch campaign to participants who pay by ACH to help ensure payments begin. In addition, a report will be available in PSW to help you determine who has/has not set up recurring payments.

To help prepare participants, we distributed a reminder about CARES Act loans and loan deferments in November.

To aid with the impact of these updates, please reference this FAQs which will be updated periodically.


a. Review the maximum number of available loans
A CARES Act loan is treated as a general purpose loan. In response to the CARES Act, you may have increased the maximum number of available outstanding plan loans for participants. If you haven’t already done so, you may now want to consider decreasing that number. Fidelity will maintain the current maximum number of outstanding general purpose loans, unless you direct us otherwise.

To change the current number of available loans, please submit a General Inquiry Service Request in Plan Sponsor WebStation® (PSW®) or provide written direction to your Fidelity service team. Changes may require updates to your plan document, loan policy, or loan procedures.

b. Managing participant status codes
Following the impact of COVID-19 on businesses and organizations, some plan sponsors used the “leave of absence” participant status code for furloughed or terminated employees. Please ensure that your participant status codes are accurately updated by December 31, 2020.

2. December Deadlines for CARES Act Distributions

The CARES Act provides special tax treatment for up to $100,000 in distributions from all 401(a), 401(k), 403(a), 403(b), and governmental 457(b) plans and individual retirement accounts (IRAs) made to qualified individuals1 on and after January 1, 2020, and before December 31, 2020. The taxable portion of a distribution may be spread evenly over a three-year period for income tax purposes and will not be subject to the 10% early withdrawal penalty.

Key Deadlines: The December deadline for processing CARES Act distributions depends on the type of request initiated and the investments held in the participant’s account. The table below identifies the relevant information and deadline when a request must be initiated so that it can be processed by December 30, 2020.

Type of CARES Act Distribution Request Initiated

Investment Type

Information and/or Documentation Must Be Received by Fidelity in Good Order by the Deadline (Close of Market)

1. Fidelity NetBenefits (online) or Contacting a Phone Representative (Preapproved Transactions)

Mutual Funds (no investment restrictions), unitized employer stock funds, commingled pools, or custom funds

Dec. 30, 2020 (the last business day before Dec. 30, 2020 if the market is not open on Dec. 30, 2020)

2. Fidelity NetBenefits (online) or Contacting a Phone Representative (Preapproved Transactions)

Employer stock that is share-accounted, self-directed brokerage, other unique assets, or plan distribution restrictions

Dec. 23, 2020

3. Employer-directed or employer-approved transactions.

The paperwork must be completed by the participant, and spouse, if applicable, and reviewed and approved by Fidelity (if the plan is using Fidelity’s “Employer-directed Service”) or the employer (if using Fidelity’s “Employer-approved Service”).

All assets

The paperwork must be initiated by Dec. 14, 2020.

1. 1. If the assets are invested in mutual funds (no investment restrictions) or unitized employer stock fund, then Fidelity must receive the documentation in good order by Dec. 30, 2020.

2.2. If the assets are invested in employer stock that is share-accounted, self-directed brokerage, other unique assets, or there are plan distribution restrictions, then Fidelity must receive the documentation in good order by Dec. 23, 2020.

Fidelity continues to send confirmation to qualified individuals1 who obtained CARES Act distributions this year. We are scheduled to send the confirmation to those who received a distribution from July 22, 2020 through November 11, 2020. The confirmation includes information about the definition of a qualified individual, the opportunity to recontribute a CARES Act distribution, a tax overview, and a reminder about the December distribution deadline. Information about the deadline is included in NetBenefits and is available via Fidelity phone representatives. As a reminder, eligibility criteria can be found here.

3. CARES Act Recontributions

Qualified individuals1 may recontribute part or all of their CARES Act distribution to an IRA or an eligible retirement plan if it accepts rollover contributions. Recontributions must be made within the three-year period beginning on the day after the date the original CARES Act distribution was received and can be made in separate transactions. All recontributions will be subject to the plan’s rules and requirements.

A qualified individual may be required to file an amended federal income tax return and use IRS Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments) to report the amount of any recontribution and potentially recover some or all of the income taxes that were originally paid on the CARES Act distribution. Please refer to the IRS website at and IRS Notice 2020-50 (Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act) for further information. Participants must complete a Recontribution of CARES Act Distribution(s) (Rollover Contribution Form) for any recontribution they make. The recontribution form is available here.

4. 2021 Minimum Required Distributions

The CARES Act and the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) impacted the 2020 minimum required distributions (MRDs) for affected participants and beneficiaries. We will send a communication in February 2021 for plans using Fidelity’s Automated Minimum Required Distribution Service to individuals who are scheduled to receive a 2021 annual MRD that will cover the following topics:

  • How MRDs are calculated
  • When they will receive their 2021 MRD
  • Information if 2021 is their first year to receive an MRD, or if they have been receiving them before 2020, but it was waived due to the CARES Act
  • How to obtain assistance with their MRD

The CARES Act waived the MRD requirement for affected participants and beneficiaries in the 2020 tax year unless required by the plan. However, participants received their 2019 MRDs in March 2020 if they delayed their initial MRD until April 1, 2020 as Fidelity processed prior to the enactment of the CARES Act. We sent affected individuals multiple communications in 2020 notifying them that Fidelity would not make 2020 annual MRDs. The CARES Act also waived any 2020 MRDs that would have normally been delayed until April 1, 2021. Please refer to the middle of the linked document section for the Impact of the CARES Act on 2020 Minimum Required Distributions.

The SECURE Act increased the age at which MRDs must begin their withdrawals from 70½ to 72. Please refer to the SECURE Act communication. The increased age applies to participants who are age 70½ on or after January 1, 2020 unless the plan requires the participant to receive their distribution sooner.

The SECURE Act also made changes to the MRD rules for beneficiaries. Their entire vested account balance must be distributed within 10 years after the year that the participant died, unless the beneficiary is an “eligible designated beneficiary.” Examples of an eligible designated beneficiary include a surviving spouse, a child under the age of majority, a person who is disabled or chronically ill, or any other person who is not more than 10 years younger than the participant. In general, the changes apply to participants who died after December 31, 2019, and we are awaiting Treasury guidance to determine the impact on Fidelity’s MRD services.

Letters will be sent to affected individuals in plans that are utilizing Fidelity’s Automated MRD Service as outlined in the table below:


Description of the MRD Group


Participants and beneficiaries who:

• have been receiving MRDs in one or more years before 2020, or
• would have received their first year MRD in 2020, but did not due to the CARES Act


Participants who would have their MRD calculated for the first time in 2021

Note: These participants may delay their initial 2021 MRD until April 1, 2022


Beneficiaries with established accounts who will be required to start receiving MRDs for the first time in 2021, or may be able to defer to a future year

Please contact your Fidelity service representative if you have any questions.

Visit the Plan Sponsor COVID-19 Resource Center for the latest resources.

1You are a qualified individual if:

•   You, your spouse, or your dependent (as defined in Internal Revenue Code section 152) is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (both referred to as “COVID -19”) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
•   You have experienced adverse financial consequences because:

a. you, your spouse, or a member of your household was quarantined, furloughed or laid off, or had work hours reduced due to COVID-19;
b. you, your spouse, or a member of your household was unable to work due to lack of childcare due to COVID-19;
c. a business owned or operated by you, your spouse, or a member of your household closed or reduced hours due to COVID-19; or
d. you, your spouse, or a member of your household had a reduction in pay (or self-employment income) due to COVID-19 or had a job offer rescinded or start date for a job delayed due to COVID-19.

Note: A “member of your household” is someone who shares your principal residence.

For plan sponsor use only and investment professional use.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Fidelity Investments Institutional Operations Company LLC, 245 Summer Street, Boston, MA 02210
© 2020 FMR LLC. All rights reserved.

Version – November 12, 2020