What You Should Know About Retirement Plans

  • As the COVID-19 pandemic continues to evolve, we remain committed on providing our clients the highest level of service. You may be aware that Congress has passed the Coronavirus, Aid, Relief and Economic Security (CARES) Act with provisions to positively impact retirement plan participants.

     

    Quick Overview of Retirement Plan Provisions:

     

    In-Service Distributions related to Coronavirus*:

    • 10% early withdrawal penalty and 20% tax withholding waived
    • $100,000 limit across all plans and IRAs
    • Includes distributions from eligible retirement plans between January 1st and December 31st 2020.
    • Option to have income taxed over three years with taxpayer ability to recontribute to any eligible retirement plan/IRA within three years regardless of that year’s cap
    • Participants self-certify that they are impacted

     
     
    Coronavirus-related Loans*:

    • Loan limit increased to the lesser of $100,000 or all of vested account balance
    • Repayment due dates between the date of CARES enactment and year-end – are delayed for one year
    • Participants self-certify that they are impacted

     

    *Defined as:

    • Is diagnosed with COVID-19;
    • Whose spouse or dependent is diagnosed with COVID-19;
    • Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19;
    • Or other factors as determined by the Treasury Secretary.

     

    Suspension of Required Minimum Distributions (RMDs):

    For 401(a), 401(k) 403(a), 403 (b) and governmental 457(b) plans and IRAs, temporary suspension of:

    • Annual RMDs due in 2020
    • Initial RMDs still due to be taken before April 1, 2020
    • Participants who want to continue taking their distributions will be able to do so.

     

    Additional Provisions

    For 401(a), 401(k), 403(b), and governmental 457(b) plans and IRAs, temporary suspension of:

    • Extension of the deadline to July 15, 2020, to contribute to IRA, HSA and MSA plans, as well as payments of the 10% penalty for premature distributions made in 2019
    • The period for 2019 employer contributions to retirement plans that would normally be due is also extended until July 15.

     

    If you have need to take a loan or hardship, please request paperwork from your financial vendor.  For additional questions, feel free to contact Risk Management at (281) 498-8110 ext. 29146 or by email riskmgnt@aliefisd.net.


     Do you need to take a loan or hardship due to COVID-19?  

    Here are the steps you need to take:

    1. Contact your financial advisor or company and request loan/hardship documents
    2. Complete the documents and send to TCG services for the TPA (Authorization) signature along with the coversheet for the 403(b) or 457
      1. TCG will send the complete forms back to your company for processing
      2. 403(b) Coversheet or 457 Coversheet

    3. Funds will be sent directly to you