New 403(b)/401(k) rules can provide help to those affected by the Coronavirus

The recently passed $2 trillion stimulus package includes key provisions affecting retirement plans. Read on to see whether the changes can help you during this crisis.

There are some new distribution and loan provisions for active participants affected by the coronavirus.  The CARES Act defines an “affected person” as a person:

1. diagnosed with COVID-19 by a CDC-approved test,
2. whose spouse or dependent was diagnosed by a CDC-approved test, or
3. who experiences adverse financial consequences due to quarantine; layoff, furlough, or reduced hours; inability to work because of lack of child care; closure or reduced hours of a business owned by the individual due to the virus; or other reasons identified by Treasury

• Coronavirus-related withdrawals available
  Special withdrawals will be permitted for an “affected person” as defined above.  You can call Vanguard Participant Services at 800-523-1188 to request this withdrawal.  Associates are available to take calls Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time, but wait times may be longer because of high call volumes.  (Note: You will need to self-certify that you are an “affected person”.  You may be required to offer additional proof.)
  
  An “affected person” as defined above, may be eligible to take out up to $100,000 in total from all retirement accounts, including retirement plans and IRAs. If you qualify, and you are younger than age 59˝, the 10% federal penalty tax that usually applies would be waived. The federal taxes owed could be spread over a three-year period. In addition, you may avoid taxes on this distribution if you reinvest the distribution back in to your account within three years.  You should contact your tax advisor for further details.
  
  This coronavirus-related withdrawal is not subject to a mandatory 20% withholding for taxes. Instead, 10% will be automatically withheld. You may request to waive this withholding entirely. 

• Loan Payback Relief (Note:  Only applies to employees who work for a participating location that has a loan provision in their adoption agreement.)
• If an “affected person”, as defined above, has a loan through the Plan, you can suspend loan payments for up to one year.  We are still working on the process for this suspension.  As of now, if you qualify for loan suspension, you should first should contact Vanguard and self-certify eligibility.  You would then inform your employer to suspend your loan.

• If you are not considered an “affected person” but have a loan through the Plan, you can suspend loan payments now through July 15.  We are still working on the process for this suspension.  As of now, you need to contact your employer if you want to suspend your loan.  We are also working on the process of how loan payments will recommence.  We will provide further details as they become available.