Legislation Would Allow Delay of 2020 Retirement Contributions

September 16, 2020 – Senator Ted Cruz (R-TX) has introduced S. 4539, legislation that includes coronavirus (COVID-19) liability protection for businesses and healthcare providers, a tax credit for employer COVID-19 testing programs, funds for safe schooling, as well as several retirement provisions. 

The following retirement provisions are included in the Reinvigorating the Economy, Creating Opportunity for every Vocation, Employer, Retiree & Youth (RECOVERY) Act. 

• Permit “unused” 2020 IRA contribution and employer plan deferral limitations to be carried over and contributed in 2021 and/or 2022, without reducing otherwise-available 2021 and 2022 contribution or deferral limitations.
• Allow a coronavirus-related distribution (CRD) from an employer-sponsored retirement plan that permits loans to be converted to a plan loan, which—assuming loan conditions were met—would make such CRDs non-taxable while they are maintained as a plan investment. (IRAs do not permit loans, so CRDs from IRAs could not be converted to loans.)
• Permit the substitution of “indexed basis” for “adjusted basis” when determining gain or loss on an indexed retirement asset held for more than three years.

1. 4539 has been referred to the Senate Finance Committee.