The economic relief that extended access to your UC 403(b), 457(b) and/or DC Plan accounts through Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) expired on December 31, 2020.
If you elected to defer your loan payments as a result of the CARES Act, your loan payments were deferred through December 31, 2020. Fidelity has reamortized your loan to include the interest accrued during the deferment period, and to determine the new amount of your payment. Your new payment amount and details are now available on NetBenefits under Withdrawal/Loans. In your payment history you may see a minor adjustment in your account of “0.01.” This was done to prevent your loan from being defaulted while re-establishing payments.
Loan payments must be made using one of the following options:
- Payroll deduction. If your loan payments are currently made through payroll deductions, Fidelity will work with UC to ensure your loan payments resume as soon as administratively feasible. You do not need to contact UC about restarting payments.
- Electronic payments. If your loan payments are currently made through Fidelity’s electronic loan payment service, visit NetBenefits to re-establish loan payments with your new amount.
UPDATED IRS GUIDANCE
On June 19, 2020, the IRS released guidance regarding coronavirus-related retirement plan distributions and loans under the CARES Act, including expanding the categories of eligible participants. In particular, the definition of a “qualified individual” eligible for a COVID-related retirement plan distribution or loan has been expanded to include any member of your household who experiences adverse financial consequences as a result of COVID-19. The individual must share your principal residence.
We will continue to keep you informed of any changes or new provisions related to the CARES Act. Keep reading to learn more about COVID-related loans and withdrawals, including who is eligible under the new IRS guidelines. Be sure to check Current News on myUCretirement.com regularly for updates.
Note: CARES Act loans and withdrawals are no longer available. Details of the provisions are included in the original article, below.
If you are financially affected by COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) allows economic relief by extending access to your UC 403(b), 457(b) and/or DC Plan accounts.
WHAT YOU NEED TO KNOW
If you are financially impacted by COVID-19, the CARES Act is designed to help by extending access to loans and withdrawals from employer-sponsored retirement savings plans like ours. Eligible participants include:
- You, your spouse or your dependent who is diagnosed with COVID-19.*
- You, your spouse or someone who shares your principal residence who experiences adverse financial consequences as a result of COVID-19.
*You must self-certify that you, your spouse or your dependent (as defined in Internal Revenue Code section 152) is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (both referred to as “COVID-19”) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act).
Withdrawals from the UC 403(b), 457(b) and DC Plan
- The CARES Act allows you to withdraw 100% of your own vested accumulations up to $100,000 (whichever is less) from your UC 403(b), 457(b) plan, or DC Plan account.
- You won’t owe the customary early withdrawal penalty when you withdraw under the CARES Act provision.
- You are still subject to federal income tax on your withdrawal, but it can be spread out evenly over three years.
- You may also repay all or part of your CARES Act withdrawal within three years and, if you do, your repayment won’t be subject to the annual IRS contribution limit. That means it won’t affect the amount you would normally contribute to your UC plan. You may also have an opportunity to recover the income taxes that you originally paid with respect to your CARES Act distribution.
- CARES Act withdrawals are available until December 30, 2020.
403(b) Plan Loans
- The CARES Act allowed you to increase the maximum amount you could borrow from your UC 403(b) Plan. This increase was available until September 22, 2020 (180 days since the CARES Act was enacted). Currently, you can borrow up to 50% of your total UC Retirement Savings Program account balance up to $50,000. Under the CARES Act, you were able to borrow up to 100% of your vested 403(b) plan balance up to $100,000, whichever was less.
- If you are currently repaying a UC 403(b) Plan loan or requested a CARES Act loan, you can delay your repayments until after December 31, 2020.
WHAT QUALIFIES AS ADVERSE FINANCIAL CONSEQUENCES?
To qualify for a CARES Act withdrawal or to delay a loan repayment, you must self-certify that you, your spouse or someone who shares your principal residence faced at least one of the following financial consequences as a result of COVID-19:
- Being quarantined, furloughed or laid off, or having work hours reduced,
- Being unable to work due to lack of childcare,
- A reduction in pay (or self-employment income),
- Having a job offer rescinded or start date for a job delayed, or
- Closing or reducing hours of a business owned or operated by you, your spouse or a member of your household.
WHAT YOU NEED TO DO
Weigh the consequences on your future financial security before you tap into your UC retirement savings accounts, especially in volatile markets. If you have access to other means of funding, such as home equity, a family member, or other viable sources of short-term cash, consider these options as well. Call Fidelity at 1-866-682-7787 to request a withdrawal or loan, or to delay your current loan repayments.
WHERE TO GO FOR MORE INFORMATION
- To understand UC 403(b) Plan loans, read How 403(b) Plan Loans Work.
- To learn more about the CARES Act or find updates on its provisions, visit irs.gov.
- If you have questions about the CARES Act or need guidance on accessing your retirement funds through these provisions, contact a UC-dedicated workplace financial consultant at 1-800-558-9182.