There are new, optional Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions for eligible participant’s of ICMA-RC Deferred Compensation plan.
The CARES Act provides relief for a “qualified” participant:
- Anyone who is diagnosed with the virus SARS-CoV-2 or the Coronavirus disease 2019 (collectively, COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
- Anyone whose spouse or dependent is diagnosed with the virus SARS-CoV-2 or the coronavirus disease 2019 (collectively, COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
- Anyone who experiences adverse financial consequences because the individual, the individual’s spouse or a member of the individual’s household experienced the following due to COVID-19:
- being quarantined;
- being furloughed;
- being laid off;
- having work hours reduced;
- being unable to work due to lack of childcare;
- closing or reducing hours of a business that they own or operate;
- reduced pay or self-employment income; or
- having a job offer rescinded or start date for a job delayed.
Eligible participants are required to acknowledge that they meet one of these criteria by completing and submitting a self-certification form to ICMA-RC.
Available Plan Provisions for Qualified Participants:
457 Coronavirus-Related Distribution (CRD):
In-service withdrawal for the 457 plan where the 10% tax on early withdrawals is waived for withdrawals up to $100,000 across all retirement plans for a qualified participant with signed CRD self-certification. Get additional details on the 457 CRD.
401(a) Loan Repayments Suspension:
401(a) Loan payments due before Dec 31, 2020 can be delayed up to one year and extend the maximum five-year repayment period accordingly. No interest will accrue while your loan is being delayed and the loan will be re-amortized when the loan becomes active again. Re-amortization fees have been waived.
401(a) Loan Limits:
401(a) loans taken out until Sep 23, 2020 are increased to the lesser of $100,000 or 100% of the participant's vested balance in the plan with self-certification. CRD loan initiation fees have been waived through Sep 23, 2020. Participants with existing loans can elect to either increase their loan amount or refinance their current loan. Get additional details on the 401(a) loan provisions.
If you are interested in utilizing any of the CARES Act provisions, you must initiate your request directly with ICMA-RC. You can reach the ICMA-RC contact center at 1-800-669-7400 to discuss the available CARES Act provisions and/or get the self-certification form.
We encourage all participants to speak with a tax or financial advisor prior to taking CRDs. Both of the City’s ICMA-RC representatives, Mark Tomasini ([email protected]) and James Collins ([email protected]), are available to meet virtually with participants to discuss the pros and cons of the loans and distribution.
They will not be able to give any tax advice, so we would definitely encourage participants to consult with a tax professional about the impact of taking the distribution. You are liable for self-certifying and for any tax implications that utilizing any of these provisions could have.