What does the CARES Act mean for me and my options to withdraw from my 401(k) account?

(This article was updated on June 25, 2020 based on additional IRS guidance issued on June 18, 2020)

With the recent enactment of the CARES Act and accompanying IRS guidance on coronavirus-related distributions, loans, and required minimum distributions from retirement accounts, Guideline is here to support you. The law has recently changed and we’ve put together this cheat sheet to help participants understand the changes and options that may be available if you are considering withdrawals from your 401(k) account during this difficult time.

Coronavirus-related hardship distribution

This distribution is available to qualified individuals up until December 15, 2020 who meet at least one of the following conditions:

  • Is diagnosed, or whose spouse or dependent is diagnosed, with COVID-19  
  • Experiences adverse financial consequences as a result of the individual, the individual's spouse, or a member of the individual's household (that is, someone who shares the individual's principal residence):
    • being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19;
    • being unable to work due to lack of childcare due to COVID-19;
    • closing or reducing hours of a business that they own or operate due to COVID-19;
    • having pay or self-employment income reduced due to COVID-19; or
    • having a job offer rescinded or start date for a job delayed due to COVID-19.

Requests for a coronavirus-related distribution must be submitted through your dashboard by December 15, 2020.

If you satisfy at least one of these conditions, a COVID-19 hardship distribution comes with many added benefits:

  • The 10% early withdrawal penalty will be waived, but the distribution will still be subject to normal income tax
  • You have the option to waive federal tax withholding for the COVID-19 hardship distribution and pay the taxes owed over 3 years
  • Ability to withdraw up to 100% of your vested account balance up to $100k
  • Option to repay hardship distribution over 3 years, tax-free
  • Lowered minimum eligible request amount of $500

Start the process of taking out a hardship withdrawal from your 401(k) account in your Guideline dashboard under the Hardship Withdrawals page.

Changes to loans due to impact from COVID-19 

If you are a qualified individual who meets one of the eligibility conditions described above, you may also have the ability to request a higher loan amount or defer loan repayments, including the ability to:

  • Request the lesser of up to 100% of vested account balance or $100k up until September 18, 2020. As part of the loan application process, you must sign and return the promissory note by September 18, 2020, 3pm EST.
  • Defer payment on any outstanding loans for up to 1 year
  • Extend your loan repayment period up to a maximum of 6 years

Start the process of taking out a loan from your 401(k) account in your Guideline dashboard under the Loans page.

Waiver of Required Minimum Distributions (RMDs):

  • Required minimum distributions for 2020 may be waived
  • If you were due to take a 2019 required minimum distribution by April 1, 2020, you may waive that RMD (along with your 2020 RMD)
  • If you received an RMD in 2020, you may be able to rollover the distributed funds up until August 31, 2020 (past the normal 60-day limit)
  • If you are a qualified individual who meets one of the eligibility conditions described above, you may also choose to claim an RMD received in 2020 as a Coronavirus-related distribution

If you have any questions, please don’t hesitate to reach out. Our Participant Success team is available to help you navigate your options. Please contact us at support@guideline.com.

Interested in more information on the CARES Act? See our Guideline Blog -

What the Coronavirus Relief Package Means for Your 401(k) Account.


This content is for informational purposes only and is not intended to be construed as tax advice. You should consult a tax professional before relying on the information provided herein.

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