CARES Act loan repayment suspension

[Ian]

Any thoughts about whether a plan that adopts the CARES act loan repayment delay provision can (or must) extend the plan's cure period when there is a deemed distribution of an outstanding loan?

Thanks for your help.

[Bird]

Can you give an example?  I'm not sure what you are asking - if a loan has deemed, then what is the meaning of an extended cure period?

[Ian]

Assume I had a deemed distribution in May 2020.  My plan allows a cure period until September 30. My plan has also delayed repayments for CARES Act qualified individuals through December 31, 2020. If I'm a qualified individual, do I get more time to repay?

[Bird]

9 minutes ago, Ian said:

Assume I had a deemed distribution in May 2020.  My plan allows a cure period until September 30.

Those two statements are contradictory.  Wouldn't the deemed distribution occur at the end of the cure period?  What actually happened in May 2020?

[Ian]

OK. I missed a payment in May 2020, and the DD took place on September 30.

[Luke Bailey]

Ian, May 2020 is after March 27 enactment of CARES. If plan adopted CARES Act loan rules, why wasn't the May, 2020 payment deferred until after end of 2020?

[Ian]

Good point that I totally missed.  Thanks.

[Ian]

Could a cure period extend the new January 2021 repayment date until June 30, 2021?

[Bird]

10 hours ago, Ian said:

Could a cure period extend the new January 2021 repayment date until June 30, 2021?

The general idea is that if loan payments are suspended til the end of 2020, the loan is reamortized starting at the beginning of 2021.  I guess if a (new/reamortized) payment due in Jan (or Feb or Mar) 2021 isn't paid, the cure period would be June 30, 2021.  If still outstanding, a deemed distribution would occur at that time.  Hard to know if that answers your question as the question remains murky.