Retirement Account Relief Provisions under the CARES Act:
The federal government passed the Coronavirus Aid, Relief and Economic Security (CARES) Act on March 27, 2020. Amongst other provisions, the Act allows for participants of 403b plans to withdraw or take loans from their 403b accounts to help provide financial needs related to COVID-19.
This is a fluid topic; updates and additional information will be provided when it becomes available.
As you review and consider the following, it is advised you work with a personal financial advisor or tax advisor to ensure you understand the tax implications, specifically in regard with the withdrawal option.
TIAA will administer the loans and withdrawals; direct question to them regarding the provisions and processes, 1-800-842-2252.
What WSU retirement plans allow for the loan or withdrawal options?
Loans or withdrawals can only be taken from the Voluntary Investment Plan with TIAA.
The WSURP, PERS, TRS and LEOFF plans currently do not have loan or withdrawal options.
How much can I take as a loan or withdrawal?
For loans, you can take up to $100,000 or the amount of the value of your account, whichever is greater.
For withdrawals, you are able to withdraw up to a combined $100,000 from all eligible plans
What penalties or taxes apply with a CARES Act withdrawal?
The 10% early withdrawal penalty for those under age 59 ½ will be waived, and the 20% mandatory federal income tax will not be initially withheld. Distributions, however, are still subject taxes, paid over a three-year period.
You also can re-contribute what you withdrew within three-year period, and if you do, it will have a positive impact on the taxes. The re-contributed amounts will not count toward the maximum contribution limit in the year that the funds are recontributed to a tax-deferred retirement account.
You are encouraged to work with a personal financial advisor or tax advisor to ensure you understand the tax implications.
When can I pursue this?
For Loans, now through September 23, 2020.
For Withdrawals, now through December 31, 2020.
Who is eligible for loans or withdrawals?
Any individual who:
- has been diagnosed with COVID-19
- has a spouse or dependent who has been diagnosed with COVID-19
- suffers financial consequences as a result of quarantine, employment furlough, lay-offs, reduced work hours or cannot work due to lack of child care as a result of coronavirus
- Anyone who experiences a financial loss to an individually-owned or operated business that is caused by a closing or reduction of hours due to coronavirus
How do I certify I meet the eligibility criterion?
You will work directly with TIAA on these requests, and will not need to provide anything to Washington State University to pursue these requests.
WSU does not know what sort of information TIAA will be requesting to support your request. You will need to contact TIAA directly to learn what is needed.
How do I contact TIAA to pursue a loan or withdrawal?
Can I stop contributing to my retirement plan during this challenging time?
You are not able to stop contributions to the WSURP, PERS, TRS or LEOFF plan.
If you are participating in in the VIP with TIAA, or the Deferred Compensation Plan, you can stop/start or change those contributions at any time.
To make changes or stop contributions:
- For the VIP: complete the Salary Reduction Agreement Form and submit by PDF or photo attachment to email@example.com.
- For DCP: Logon to your DCP Account and request the change. You can also call DCP at 1-888-327-5596.
I’m a retired WSURP participant. Am I required to take a required minimum distribution (RMD) from my retirement account this year?
No. Required minimum distributions can be waived for 2020. If you are set up for a scheduled RMD and you do not want to take it for 2020, contact TIAA.
I turned 70½ last year and am supposed to take my first RMD on April 1, 2020. Am I still required to take this distribution?
No. All required minimum distributions for defined contribution plans have been waived for 2020, including your first RMD (provided that you had not already taken the distribution before January 1, 2020).
Also, under the normal rules you would not be required to take the RMD if you are an active faculty or staff member contributing to the retirement accounts. Your trigger for being required to take the RMD would be the April following your last year of employment.