The new Coronavirus Aid, Relief, and Economic Security (CARES) Act has included changes to options available for your 401(k). It eases retirement plan hardship distributions and loan rules to free up funds for individuals impacted by the pandemic.
Vendors
Touchstone Retirement Group is our 401(k) vendor. You can reach Participant Services at 877-937-2040 or clientservices@tsretirement.com.
Caliber Wealth Management is our plan’s financial advisor. You can reach Linda Patch, our dedicated plan advisor, at 385-223-8688 / 844-358-6592 or linda@caliberwm.com. Keep in mind that Linda’s services to review and discuss your 401(k) and financial plans are offered to you at no cost.
Summary of 401(k) Changes
A summary of the CARES Act changes are:
- Hardship Distributions – the 10% early withdrawal penalty is waived and there will not be a 20% mandatory federal tax withheld on withdrawals up to $100k for an individual who:
- is diagnosed with COVID-19;
- whose spouse or dependent is diagnosed with COVID-19;
- who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or
- other factors as determined by the Treasury Secretary
Note: The online distribution request process won’t be up and running at Touchstone Retirement Group until April 10, 2020. Although there are not mandatory 20% taxes withheld, taxes will still be owed and can be paid over a three-year period without penalty. If the entire distribution amount is repaid to the 401(k) plan within 3 years, no taxes will be due.
- Plan Loans – Loan limits are now doubled to the lessor of $100,000 or 100% of participant’s vested account balance in the plan. If you already have a 401(k) loan with a loan payment due from the date of the Act’s enactment, you can delay your loan repayment(s) for up to one year. If you have a loan through Magleby’s 401(k), please contact HR to either continue your 401(k) payments or stop them until 12/31/2020. Loan payments would resume 1/1/2021.
- Temporary Waiver of Required Minimum Distribution Rules (RMDs) – For individuals over age 72, this waives the requirement for 2020 to have to take a required minimum distribution.
The link below will provide more details. However, please call Linda Patch at Caliber Wealth Management for clarification and specific questions regarding your 401(k).
