CARES Act Overview for UU Retirement Plan Participants
CARES Act Overview for UU Retirement Plan Participants
Benefits & Compensation for Congregations

UU Organizations Retirement Plan participants:

Options are now available to you as a result of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The following information was created on April 9, 2020 during a time of rapid change. 

We invite you to join us in taking several calm moments to approach the information with patience and in the confidence that many people are working to support participant needs.


The CARES Act was signed into law on March 27, 2020 and the UUA, through the UU Retirement Plan Committee, and in consultation with the plan advisor, adopted CARES Act provisions effective April 9, 2020.


The Act provides distribution and loan options for those of our participants who have been touched by the coronavirus’ impacts.

Changes to RMDs (Required Minimum Distributions) and other items were also addressed by the Act.


Utilizing CARES Act relief provisions gives our participants flexibility as they face financial hardships during this crisis. Please recognize that taking funds from your retirement plan at this time will, of course, be likely to impact your long-term financial security, and therefore please only act after careful consideration of all options available to you.


We remind you that the Plan provides for each participant to engage TIAA for a no-cost annual consultation. Before making any decisions, you may be wise to reach out to either a TIAA financial consultant or a qualified advisor of your choice to review your current situation, budget, and concerns. Call TIAA at 800-842-2829.


What does this mean for you?
We know that keeping you and your family healthy and safe amid the challenges surrounding COVID-19 needs to be your first priority. That’s why we’re working with our retirement plan partners at TIAA to break down the provisions in the CARES Act to make them easier to understand so you can determine if they may be right for you.

Read on for details regarding:

  • Waiver of penalties and withholding for certain qualified distributions from retirement plan accounts
  • Increased retirement plan loan amount limits and optional temporary delay of loan repayments
  • Optional suspension of existing required minimum distributions (RMDs) for 2020 (unlike other CARES Act provisions, no coronavirus certification is required to request suspension of the RMD)

Retirement plan withdrawals and loans

Distributions (withdrawals):
You are considered eligible to take Coronavirus-related distributions described below from your UU retirement plan if any of the below conditions are met:  

  • You have been diagnosed with COVID-19 by a test approved from the Centers for Disease Control and Prevention
  • You have a spouse or dependent who has been diagnosed with COVID-19
  • You suffer financial consequences as a result of quarantine, employment furlough, layoffs, reduced work hours or cannot work due to lack of childcare as a result of coronavirus
  • You experience a financial loss to an individually owned or operated business that is caused by a closing or reduction of hours due to coronavirus
  • Other factors as determined by the Secretary of the Treasury or their delegate


How can the act help if you are eligible for these Coronavirus-related distributions?
Penalties and withholding are waived for qualified distributions from retirement plan accounts.

Provided the above eligibility criteria are met, the CARES Act waives the 10% early withdrawal penalty otherwise applied to current employees under age 59 ½, and eliminates the 20% withholding for any coronavirus-related distributions of up to $100,000 across qualified retirement plans and IRAs. Note: While the 20% withholding will not be taken from distributions, you will have the option to request that TIAA withhold the tax if you want. 

  • The money distributed will be taxable; you will have the option to pay taxes due over a three-year period. We suggest you consult with your personal tax advisor in order to create a plan based on your particular circumstances and clergy/non-clergy status. 
  • The act also allows you to return these withdrawn funds to the plan within three years regardless of that year’s contribution limit, making it easier to replace the amount of your distribution in your retirement account. The funds timely returned to the plan will not be subject to income tax.

Loans

If you have existing retirement plan loan payments
You may be able to defer payments for one year and extend the term of your loan by one year. Interest will continue to accrue, and the loan will be reamortized. Delaying repayment increases the total amount to be repaid. Repayment deferral is not automatic, it must be requested by contacting TIAA.

 

Retirement plan loan limits are temporarily increased under the CARES Act
Maximum retirement plan loan limits have been increased from $50,000 or 50% of vested account balances to the lesser of $100,000 or 100% of the vested account balance for loans made within 180 days of March 27, 2020, the date the CARES Act was signed into law.

This is also dependent on the UU Organizations Retirement Plan’s loan policy, the type of loan, the number of loans allowed, and limits offered within our plan. We currently allow participants a maximum of two plan loans.

If you choose to take a loan, the loan approval process will remain the same as it does for non-coronavirus-related loans. 

•    It is important to note that any loan in default is treated as a taxable distribution from the Plan.

Visit https://www.TIAA.org/uua or call TIAA at 800-842-2829 if you have questions related to taking a loan or the possibility of deferring repayments on an existing retirement plan loan, and how that will increase the total amount you repay.

For retirement plan distributions and loans, TIAA encourages you to set up electronic funds transfer (EFT) for faster delivery of funds.

Suspension of required minimum distributions (RMDs)

To help provide relief for those required to take RMDs, the CARES Act allows you to cancel your 2020 RMD payments and restart them in 2021. 

  • If you already have an RMD payment scheduled for this year:  You have the flexibility to cancel it, and TIAA will restart it automatically in 2021.
  • If you have already started receiving your RMD this year: You have the option to repay it as a rollover. If checks have already been sent, you have 60 days from the date of distribution to roll over those funds into a plan that accepts rollovers or into an IRA. In past disaster scenarios, the IRS has extended that rollover period. TIAA will monitor regulatory activity and notify clients if an extension is granted in this context.
  • If you have not set up your RMD this year: Based on the CARES Act, TIAA cannot set up new RMD payments. If you need the money, you can take a withdrawal. The quickest way to set that up is through the TIAA website; consider setting up an EFT for quicker receipt of funds.


Other changes born of the CARES Act


Tax filing and payment changes:
The Treasury has extended federal tax filing and IRA contribution deadlines. The federal deadline for filing a 2019 tax return—and any corresponding 2019 IRA contributions outside of your retirement plan—has been extended to July 15, 2020.
Student loans and stimulus payments 
Borrowers who have certain federal student loans have the opportunity to defer payments until later in the year, and qualified taxpayers meeting specific single/joint filing criteria may be eligible to receive stimulus payments. Please consult your personal tax advisor or your loan provider for additional information.


Next steps


If you meet the eligibility criteria detailed above, would like to speak to a TIAA representative or financial consultant, or would like to request loans or distributions, you can do so by logging in to your online account at https://www.TIAA.org/uua or call TIAA at 800-842-2829. 

Visit TIAA.org for more information on the provisions of the CARES Act and to engage planning tools, webinars and related resources. We recommend reviewing all your options prior to making any decisions. 

For UU Clergy – a word about financial and tax advice


Clergy are encouraged to pay particularly close attention to tax implications associated with Exercise of Ministry funds in their denominational qualified church plan. When approaching a relationship or conversation with any financial or tax advisor, you might question that person until you are satisfied that they understand the unique tax provisions and potential consequences related to rolling funds out of the qualified church plan, by which action the IRS’ permitted income exclusion when filing your tax return, can be negated.

This page's information regarding the CARES Act provisions affecting retirement plans was composed Thursday, April 9, 2020, by UU Retirement Plan Director, Linda Rose, and UU Retirement Plan Committee Chair, Katherine Brewin working with the Plan's recordkeeper, TIAA, and utilizing the information available at that time. 

 

For more information contact retirementplan@uua.org.

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