Coronavirus Aid, Relief and Economic Security (CARES) Act Distributions
In the wake of the novel coronavirus, COVID-19 pandemic, the president signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act that allows ‘qualified individuals’ the ability to take a new penalty-free retirement account distribution.
Ideally, your money would stay in your retirement account until you retire. Realistically, there may come a time when you need to access your retirement funds early to pay for extraordinary emergency expenses.
Please find your annuity/ supplemental pension plan below to see important updates from the Board of Trustees in response to the recent passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
The Board of Trustees of the Indiana Kentucky Ohio Regional Council of Carpenters Defined Contribution Plan met to review the allowable provisions under the CARES Act for the benefit of the member participants. As a result of that review and keeping in mind the intent of the retirement plan, a limited version of the maximum distributable amount will be made available to ‘qualified individuals’ through June 30, 2020. A participant who meets the definition of ‘qualified individual’ will have the ability to request the lesser of 50% of their eligible account balance limited to a maximum $15,000 for COVID-19 distributions.
To be an eligible ‘qualified individual’ for the CARES Act COVID-19 distribution you must meet any one of the following criteria:
- Diagnosed with COVID-19
- Have a spouse or dependent(s) diagnosed with COVID-19
- Experience adverse financial impact due to quarantine, furlough, layoff, reduced work hours or inability to work for childcare-related issues due to COVID-19
- Faced with other COVID-19-related factors as determined by the Secretary of the Treasury
You must certify that you are a ‘qualified individual’ and eligible for a COVID-19 distribution.
If you are eligible and take a distribution, you may repay these distributions within three years beginning with the date of the distribution.
You will be required to pay income taxes on the distribution. You do have a three-year time span beginning with the date of the distribution to complete the tax payment.
We expect the IRS to issue guidance regarding how taxes will be reported and paid over the three-year period, as well as the impact of repayment on taxes paid.
10% federal tax withholding will be applied to the distribution unless you elect otherwise.
If you are married your spouse must consent to the distribution.
If you are eligible for this distribution, please consider exploring all other options to ensure this is appropriate for your situation. If you decide to take a distribution, please contact BeneSys at 1-800-700-6756 and download the checklist & required forms here:
Here are some things to consider before taking a withdrawal from your retirement account:
- Your retirement plan account is meant to provide retirement income. It should be a last resort source of cash for expenses.
- You will need to pay taxes on the amount withdrawn.
- You may miss out on the growth opportunity of the money you withdraw. The amount you withdraw affects what is available to invest for retirement.
Loans to Participants
You may have read that the CARES Act also expanded the availability of loans through retirement plans. The Plan does not permit loans and a Coronavirus-Related Loan is not available from your vested account balance.
This Notice summarizes the changes to your Ohio Carpenters’ Annuity Plan (“Plan”) adopted by the Board of Trustees in response to the recent passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
The changes increase the availability of distributions from the Plan for individuals affected by the Coronavirus pandemic. In addition, the CARES Act waives the requirement to receive required minimum distributions in 2020. These changes are effective immediately.
Who is Eligible to take a Coronavirus-Related Distribution?
You may choose to take a Coronavirus-Related Distribution from the Plan if you meet the standard of a “Qualified Individual.” You are considered a “Qualified Individual” if you certify in writing to the Plan that you:
- have been diagnosed with COVID-19 or the underlying virus SARS-CoV-2; or
- have a spouse or dependent who has been diagnosed with COVID-19 or SARS-CoV-2; or
- have experienced an adverse financial consequence for any of the following reasons due to COVID-19: being quarantined, furloughed, laid off, or a reduction of hours; being unable to work due to caring for a child; or the closing or reduction of hours of a business that you own or operate.
If you wish to take a Coronavirus-Related Distribution, please contact BeneSys at 855-837-3528. You may download the required forms and a checklist here:
How much can you withdraw from the Plan?
You may take a Coronavirus-Related Distribution from your vested account balance of up to $15,000 (or, if less, 50% of your vested account balance in the Plan).
If you are a Qualified Individual, you are eligible for a Coronavirus-Related Distribution, even if you continue to be actively employed or are under age 59½.
Coronavirus-Related Distributions are subject to the following rules:
- You can elect to repay all or part of the distribution within three years of the day of the distribution.
- Repayments may be made to the Plan or another eligible plan, without regard to the limitations on retirement account contributions for those later years.
- If you do not repay all or part of the distribution, regular income taxes apply. The amount of the distribution may be included in your gross income for tax purposes in equal installments over the next three tax years beginning in 2020.
- The distribution is not subject to the mandatory 20% tax withholding or the 10% penalty tax on distributions before age 59½.
- If you are married, you will need to obtain your spouse’s consent.
Loans to Participants
You may have read that the CARES Act also expanded the availability of loans through retirement plans. The Plan does not permit loans and a Coronavirus-Related Loan is not available from your vested account balance.
This Notice summarizes the changes to your Northwest Ohio Carpenters, Millwrights & Pile Drivers Supplemental Pension Plan (“Plan”) adopted by the Board of Trustees in response to the recent passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
The changes increase the availability of distributions from the Plan for individuals affected by the Coronavirus pandemic. In addition, the CARES Act waives the requirement to receive required minimum distributions in 2020. These changes are effective immediately.
Who is Eligible to take a Coronavirus-Related Distribution?
You may choose to take a Coronavirus-Related Distribution from the Plan if you meet the standard of a “Qualified Individual.” You are considered a “Qualified Individual” if you certify in writing to the Plan that you:
- have been diagnosed with COVID-19 or the underlying virus SARS-CoV-2; or
- have a spouse or dependent who has been diagnosed with COVID-19 or SARS-CoV-2; or
- have experienced an adverse financial consequence for any of the following reasons due to COVID-19: being quarantined, furloughed, laid off, or a reduction of hours; being unable to work due to caring for a child; or the closing or reduction of hours of a business that you own or operate.
If you wish to take a Coronavirus-Related Distribution, please contact Northwestern Ohio Administrators, Inc. at 419-248-2401. You may download a checklist and required forms here:
How much can you withdraw from the Plan?
You may take a Coronavirus-Related Distribution from your vested account balance of up to $15,000 (or, if less, 50% of your vested account balance in the Plan).
If you are a Qualified Individual, you are eligible for a Coronavirus-Related Distribution, even if you continue to be actively employed or are under age 59½.
Coronavirus-Related Distributions are subject to the following rules:
- You can elect to repay all or part of the distribution within three years of the day of the distribution.
- Repayments may be made to the Plan or another eligible plan, without regard to the limitations on retirement account contributions for those later years.
- If you do not repay all or part of the distribution, regular income taxes apply. The amount of the distribution may be included in your gross income for tax purposes in equal installments over the next three tax years beginning in 2020.
- The distribution is not subject to the mandatory 20% tax withholding or the 10% penalty tax on distributions before age 59½.
- If you are married, you will need to obtain your spouse’s consent.
Loans to Participants
You may have read that the CARES Act also expanded the availability of loans through retirement plans. The Plan does not permit loans and a Coronavirus-Related Loan is not available from your vested account balance.
