CARES Act Loan Repayments And The IRS Cure Period

[mming]

A participant has been repaying their plan loan as slowly as possible, i.e., relying on the IRS cure period for every payment - for example, any repayments due during the first quarter of 2020 wouldn't be paid until the end of June.  With the passage of the CARES Act, could the repayments due during the first quarter (or at least prior to March 27, 2020) now be postponed for 1 year, or do you think the Act allows only postponement of repayments originally due after March 27th, without the application of the cure period?  

 

 

[RatherBeGolfing]

2202(b)(2)(A) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on the date of the enactment of this Act and ending on December 31, 2020, such due date shall be delayed for 1 year

72(p)(2)(B) is the 5 year maximum term, 72(p)(2)(C) is substantially level amortization requirement

Id say the actual payment per the amortization schedule would need to be scheduled on or after March 27, 2020

[ratherbereading]

Also, it's up to the plan sponsors if they want to adopt these changes.

[Belgarath]

Also, it has to be a "Qualified individual." It does NOT apply to everyone who just feels like delaying a loan payment.

[Larry Starr]

20 hours ago, mming said:

A participant has been repaying their plan loan as slowly as possible, i.e., relying on the IRS cure period for every payment - for example, any repayments due during the first quarter of 2020 wouldn't be paid until the end of June.  With the passage of the CARES Act, could the repayments due during the first quarter (or at least prior to March 27, 2020) now be postponed for 1 year, or do you think the Act allows only postponement of repayments originally due after March 27th, without the application of the cure period?  

 

 

A perfect example of why our loans (the very few we have) always require salary deduction repayment.  How was this set up that allows the employee to skip his payments?  Sounds like he is a real PIA!

[mming]

Thanks everyone.  Ya got him pegged, Larry - he's an owner.

[Luke Bailey]

mming, there is a fuller discussion of this topic, along with related issues, here: