In a September 2005 release soon after Hurricane Katrina, the Internal Revenue Service (IRS) reported that for the first time ever, the IRS and the departments of Treasury and Labor would provide broad-based relief to retirement plan participants affected by a major disaster. Broad-based relief has been provided since to residents of specific disaster areas, but the 2020 coronavirus pandemic, known as COVID-19, is a disaster that has affected all communities in the United States. On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was quickly signed by President Trump.
Some employers and plan recordkeepers have been overwhelmed with calls from participants requesting plan loans or hardship distributions. Some plans do not allow loans or hardship distributions. Other plans allow hardship distributions, but existing rules may pose a problem for many participants.