On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act) was signed into law. The law is one of the largest stimulus packages in our nation’s history and includes multiple provisions that affect the Solo 401k.
One goal of the CARES Act is to give those affected by the current pandemic access to your retirement funds while minimizing tax consequences and maximizing the ability to return your funds to the Solo 401k where allowed.
If your current employer 401k plan doesn't allow in-service distributions, the current Coronavirus (COVID-19) related distributions may allow you a way to access those funds.
During the Coronavirus Crisis, the CARES Act was passed by Congress to allow retirement plan participants to gain more access to their funds in times of economic hardship.
If your current employer 401k plan has adopted the CARES Act provisions, that means you can take a distribution of up to $100,000 from your 401k plan (even if you otherwise wouldn't be eligible for an in-service distribution).
The Coronavirus-Related Distribution (CVRD) is an eligible rollover distribution; the provisions seem to indicate the CVRD can be paid back to any plan or IRA.
That means that after you take the CVRD from your current employer 401k plan, you can re-deposit those funds into your Solo 401k, getting them into control.
This is a rare and limited opportunity to get an in-service distribution from a current employer 401k plan. Now more than ever you need those funds in your control.
Ready to pay back a CARES Act distribution? Click here for the CARES Act repayment form.