Jonathan Barber | Source | Senior Vice President, Compensation & Benefits Policy Research at The Ayco Co...

The firm likes the flexibility of these loans to be available to employees, but you have to couple that with education. Make sure people understand the rules. Under the CARES Act, if you have contracted the virus or have been financially adversely affected due to reduced work hours, being unable to work or furlough, you can take a taxable distribution up to $100,000 not subject to the 10% early withdrawal penalty that will be taxed pro rata over a three-year period.

But, you are relying on the participant to get that done. With a loan, the repayments are structured by the plan. Sponsors have the option to offer one or the other option, both or none. We want to see both because of the flexibility.