401GO Cares and the CARES Act 401(k) Rules


At 401GO we hold the vision that everyone should have access to a 401(k) plan, and that it should be affordable and portable. Costs should be low and technology abundant. However, given the current events, we are also realistic. We understand that businesses may not be looking at the 401(k) plan as much as other more pressing matters. We want to put your mind at ease. We take care of the 401(k) plan so you can focus on navigating the difficult economic dilemma prevalent in the United States today.

When it comes to saving for the future, it is usually with the perspective of anticipated and expected outcomes. Especially when we consider the goal of retirement. The outcome, we hope, is having sufficiently saved up or that things will be better off when that future event or moment arrives. The unprecedented spread of COVID-19 has changed all that for many people. In that respect, we understand that access to the 401(k) account can have a life-altering outcome.

On March 27, 2020 the over $2 Trillion dollar Coronovirus Aid Relief and Economic Security (CARES) Act passed. This legislation has many provisions in it to help with the situation that many face. More specifically, it provides unique access to the 401(k) account for those participating.

All these changes that affect the 401(k) can be immediately implemented by 401GO. We can accommodate these things for our existing clients now. It is important to people and thus important to us.

Those changes to the 401(k) plan from the CARES Act are as follows:

CARES Act 401(k) Withdrawal Parameters

  • Withdrawals taken in 2020 (January 1 to December 31) will be penalty-free up to $100,000 from the 401(k) account
  • Those who have been directly or indirectly affected by the COVID-19 outbreak are eligible for this withdrawal. Whether the withdrawal is for themselves, a spouse, or a family member. If they have suffered from an illness or financial setback through the loss of work, benefits, business, etc.
  • Certification of eligibility happens on the participant level. In other words, the participant can certify the need and not the plan sponsor)
  • The withdrawal can be paid back up to three years after it is taken. It will be paid back into either the 401(k) plan, from which it was withdrawn, or another retirement account, such as an Individual Retirement Account (IRA). If it is not paid back then it is taxable to the participant.

CARES Act 401(k) Loan Parameters

  • Existing 401(k) loans from March 27, 2020 to December 31, 2020 can be delayed for one year. If it is delayed, it would still accrue interest for the time it is delayed.
  • The 401(k) loan can also be extended out one year from the original term.
  • 401(k) loans can be take from 100% of the vested account balance for up to a max of $100,000.

CARES Act 401(k) Required Minimum Distributions (RMDs)

  • Distributions that are required for those of a certain age (>originally 70 1/2 and now 72) are waived for 2020.
  • In other words, if it’s the first RMD that would be taken April 1, 2020 it is waived from having to be withdrawn.

These changes can be made upon request. They are available to those that are sponsoring a 401(k) plan. The plan document will eventually need to be updated. The deadline for that is January 1, 2022.

Learn more about our 401(k) options optimized for small and medium sized businesses.


Jared Porter
Jared is 401(k) expert and early-morning basketball enthusiast. He enjoys explaining complicated retirement issues in simple ways.

Learn more about our 401(k) options optimized for small and medium sized businesses.