The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and has three provisions that directly impact PERAPlus 401(k)/457 and PERA DC Plan participants:
1. Coronavirus-related Distributions
PERAPlus 401(k)/457 Plan participants can take up to $100,000 as a “coronavirus-related distribution” between January 1, 2020, and December 30, 2020. Coronavirus-related distributions are broadly defined as distributions to individuals who:
- Are diagnosed with COVID-19.
- Have spouses or dependents who are diagnosed with COVID-19.
- Experience (or have spouses or household members who experience) adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of childcare, closing or reducing hours of a business owned or operated by the individual, having a reduction in pay or self-employment income due to COVID-19, or having a job offer rescinded or start date delayed due to COVID-19.
Members who take coronavirus-related distributions from the PERAPlus 401(k)/457 Plans will be able to repay those distributions over a three-year period after taking the distribution. Additionally, participants may spread the taxes on the distribution over a three-year period without an additional tax penalty (usually, a member who takes a distribution from the 401(k) prior to age 59½ is required to pay an additional 10% penalty).
2. Coronavirus-related Loans
Between March 27, 2020, and September 22, 2020, PERAPlus 401(k)/457 participants affected by COVID-19 (as detailed above) can take up to $100,000 as a loan and the loan amount can be up to the full account balance. Repayment of these loans, as well as existing loans, may also be delayed for up to one year for those participants affected by COVID-19.
3. Required Minimum Distributions (RMD)
Retirees and beneficiaries who have PERAPlus and/or PERA DC Plan accounts are not required to take minimum distributions from these accounts in 2020. (This does not apply to the PERA Defined Benefit Plan.) If a retiree or beneficiary had already received a distribution from Voya to satisfy the RMD for 2020, PERA may be able to accept the full amount of the distribution back to the Plan on or before August 31, 2020.
For more information on the provisions of the CARES Act, please contact Voya Financial at 1-800-759-7372 and select the PERAPlus/DC option.
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