As a participant in our Lafayette College Retirement Plan, we want to make you aware of the options available to you as a result of the Coronavirus Aid, Relief and Economic Security (CARES) Act.
New legislation was recently passed by Congress to help ease some of the financial impact of the COVID‐19 crisis. The federal government has implemented changes which allow greater choices for you to consider as you navigate financial decisions in the coming months. As always, we recommend reaching out to your TIAA or Fidelity financial consultant to review your current situation–along with short- and long-term financial goals–before making any decisions.
Lafayette College has chosen to adopt the following CARES Act provisions for our retirement plan:
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 and Fidelity to break down the provisions in the act to make them easier to understand so you can determine if they may be right for you.
Retirement plan withdrawals and loans
Who is eligible?
You are considered eligible to take distributions/loans from your retirement plan if any of the below conditions are met:
How can the act help if you are eligible?
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 and eliminates the 20% withholding for 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 add withholding if you want.
Distributions will be subject to taxation, and you will have the option to pay taxes due over a three-year period. We suggest you consult with your personal tax advisor.
The act also allows you to reinvest withdrawn funds within three years regardless of that year’s contribution limit, making it easier to replace the amount of your distribution in your retirement account.
Retirement plan loan limits are increased
Maximum retirement plan loan limits have been increased from $50,000 or 50% of vested account balances to $100,000 or 100% of the vested account balance for loans made within 180 days of enactment of the CARES Act on March 27.
Certain loan options are permissible through the Lafayette College loan policy with TIAA. Lafayette College permits you to borrow from your TIAA-CREF accounts under a loan program designed and administered by TIAA. You may not borrow amounts you invest with Fidelity Investments.
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.
Visit TIAA.org or call TIAA at 855-400-4294 if you have questions related to taking a loan or the possibility of deferring payments to an existing retirement plan loan.
Review this guidance, which lists items you may wish to consider before taking loans and distributions from your retirement plan.
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. Participants are free to contact either TIAA or Fidelity to suspend RMDs if you already had a payment scheduled for this year. Those who turn age 72, and were going to be subject to a RMD this year, you will not need to initiate them for calendar year 2020.
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.
If you meet the eligibility criteria detailed above and would like to speak to a financial consultant regarding your options, you can do so by logging in to your online account at TIAA.org / netbenefits.fidelity.com or by calling TIAA at 855-400-4294 / Fidelity at 800-343-0860. We recommend reviewing all of your options prior to making a decision.