CIPs are generally the only employees who can benefit from the CARES Act relief provisions that employers choose to provide. For example, retirement plan participants who are not CIPs are not entitled to penalty free immediate retirement plan distributions of up to $100,000, participant loans in increased maximum amounts, or participant loan repayment relief. An exception applies to the waiver of required minimum distributions for 2020, which employers can make available to all participants, not just CIPs.
So, Job One for employers interested in extending coronavirus retirement plan relief to their employees is figuring out which plan participants are the CIPs who qualify for such relief.
CIPs generally include all participants who (1) have tested positive for COVID-19 or have a family member who has tested positive, or (2) have incurred adverse financial consequences as a result of coronavirus-related work restrictions, outlined in detail here. Fortunately, employers are entitled to rely on a participant's self-certification of that participant's CIP status – no doctor's note or other employer verification is required.
Employers also need to bear in mind that if they grant CARES Act relief to one self-certified CIP, that relief must be extended to all such retirement plan CIPs on a non-discriminatory basis. Also, the specifics of any CARES Act relief provision extended to CIPs should be carefully considered with plan advisors or legal counsel so that any action taken now comports with retroactive plan amendments that will be required in 2022.