Coronavirus Aid, Relief and Economic Security (CARES) Act Turlock Irrigation District Deferred Compensation Plans Plan Providers: Mass Mutual, Nationwide and VALIC
Important Information for All Deferred Compensation Participants We would like to provide you with some information regarding the Coronavirus Aid, Relief and Economic Security (CARES) Act that was signed into law on March 27, 2020. This newly enacted emergency legislation seeks to assist workers impacted by COVID-19 by increasing access to retirement plan account savings. The Turlock Irrigation District has opted-in to certain provisions of the CARES Act. These changes to the Deferred Compensation Plan include:
Coronavirus related distributions (CRD) are allowed penalty-free and can be repaid (current participants);
Required minimum distributions (RMD) suspended for retired participants and/or former employees of the Turlock Irrigation District.
CRD - The CARES Act created a new category of withdrawal called a “Coronavirus-related distribution” for 401(k), 403(b) and governmental 457(b) plans. These withdrawals can be made on or after January 1, 2020, and before December 31, 2020. To qualify, the participant must be a person who: • Was diagnosed with SARS-CoV-2 or COVID-19 by a test approved by the Centers for Disease Control and Prevention. • Whose spouse or dependent is so diagnosed by such a test. • Who experiences adverse financial consequences as a result of – Being quarantined. – Being laid off or furloughed or having work hours reduced due to the virus. – Being unable to work due to lack of child care due to the virus. – Closing or reducing hours of a business owned or operated by the individual due to the virus. – Other factors as determined by the Secretary of the Treasury.
Updated 04/21/2020, TID Human Resources
A participant may withdraw up to $100,000 as a Coronavirus-related distribution. The plan sponsor may rely on the participant’s representation that he or she is entitled to receive the distribution; no further documentation is necessary. These distributions are exempt from the 10% penalty tax on premature distributions regardless of the participant’s age. While the distribution is subject to ordinary income tax, the participant can choose to include one-third of the taxable amount in their income each year for three consecutive years in order to spread the tax burden over a longer period of time. The participant has the option, but is not required, to repay the distribution within three years. Individuals should consider all factors before accessing retirement savings. While the CARES Act is available to provide relief to those in need, employees should carefully consider the impacts of accessing their retirement savings. We encourage all individuals to consult a financial professional, or you may also contact your deferred compensation provider for the latest information regarding markets and the current environment.
RMD - The CARES Act created a waiver to the required minimum distribution for the year 2020 for those retired/former employee participants that meet certain age requirements. Under this provision, retired or former employees of the District are not required to take out a required minimum distribution from deferred compensation plans, unless the retired/former employee requests to take out funds from their account. The waiver allows the retiree/former employee to not incur tax penalties for not taking out a minimum distribution from their account as required under the IRS code.
Deferred Compensation Plan Providers Contact Numbers for CRD and RMD information Mass Mutual Website: www.massmutual.com Call Center: 1 (800) 528-9009 Nationwide Website: www.nrsforu.com Customer Care: 1(877) 677-3678 VALIC Website: www.valic.com Customer Service: 1(800) 448-2542
Updated 04/21/2020, TID Human Resources