Tax advantaged assistance to COVID-19 impacted employees

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Overview

Many employers are gearing up to help employees during the Coronavirus Disease 2019 (COVID-19) pandemic. To support those efforts, employers should be aware of existing guidance regarding Section 401(k) hardship distributions, how to provide tax-free funds as qualified disaster relief payments, and how to use charitable grants to support their employees affected by the COVID-19 pandemic. 

Note: Congress has passed legislation (Families First Coronavirus Response Act, H.R. 6201) affecting employers (including nonprofits) with up to 500 employees with respect to paid sick leave and paid family leave for individuals impacted by COVID-19. See our PwC insight Treasury announces tax payment relief; Senate clears COVID-19 bill; talks continue on stimulus tax measures for more information.

There are several ways that employers can immediately assist employees who have been impacted by the COVID-19 pandemic, including qualified disaster relief payments. 

In prior disasters, such as Hurricane Harvey and Superstorm Sandy, the IRS has issued guidance allowing other employer-based programs, such as expedited qualified plan loans. Similar guidance may be issued for the COVID-19 pandemic.

The takeaway

There are several ways that employers can immediately assist employees who have been impacted by the COVID-19 pandemic, including qualified disaster relief payments. 

In prior disasters, such as Hurricane Harvey and Superstorm Sandy, the IRS has issued guidance allowing other employer-based programs, such as expedited qualified plan loans. Similar guidance may be issued for the COVID-19 pandemic.

Contact us

Craig O’Donnell

Principal, Practice area leader, PwC US

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