Is the maximum loan amount under the CARES Act reduced by an outstanding loan balance?

Yes, this rule wasn’t changed. The maximum loan amount would be reduced by the highest amount of loan balance outstanding the preceding 12-month period.

For example, a plan participant takes a 30,000 loan on December 1, 2019; on April 15, the same participant self-certifies as a CARES Act qualified individual and requests a maximum loan of $100,000. Because this participant had a $30,000 loan outstanding during the prior 12-motnh period, the maximum loan amount would be reduced to $70,000 ($100,000 minus the $30,000 loan taken on December 1, 2019).

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Cetera Retirement Plan Specialists is a third-party administrator and may not offer tax, legal or investment advice. Plan sponsors should consult their own tax, legal or investment professionals.