The CARES Act: Opportunity Expiring Soon - United Benefits

The CARES Act: Opportunity Expiring Soon

by: Gregory Guenther, CRPC & ChFEBC | September 21, 2020

 COVID-19 has created unprecedented challenges for our world. The way we live life and do business is vastly different from just a few months ago. To fight the resulting economic disruption, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was recently signed into law to help Americans.  Many of the programs designed within the CARES Act have expired or funds have been exhausted, but you still have an opportunity for a limited time for several remaining programs. 

 As a Federal employee and participant in the TSP, the penalty waiver of early TSP withdrawals presents a tremendous planning opportunity for you. The TSP has accepted and approved the waiver of early withdrawal penalties under the guidance of the CARES Act.  We have assisted many Federal employees through this option, which allows the withdrawal and subsequent rollover (of up to $100,000) from your TSP into a qualified IRA.  This is perhaps the most helpful program which you are eligible for until year-end 2020. TSP’s application deadline for this withdrawal is December 15, 2020, please act now!

 You may contact your United Benefits Advisor or our Retirement Specialist Hotline if you need guidance on your specific situation, and to discuss eligibility. We have retirement consultants available Monday through Friday from 9:30 am to 6:00 pm EST.  We look forward to hearing from you.

   

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 Summary of Programs:

 +10% early withdrawal penalty from retirement accounts for COVID-19 related expenses waived. This usually applies to people under age 59 ½. Note that income taxes are still due on any withdrawals, which are not subsequently rolled into a qualified retirement account. (contact us to discuss eligibility)

 +Plan loan limits doubled: The law allows plans that offer loans to double the amount that can be borrowed to $100,000 or 100% of the vested account balance, whichever is less.  The TSP has approved this option.

 +COVID-19 related withdrawals available: Special withdrawals will be permitted for those affected by the coronavirus. (contact us to discuss eligibility)

 +Required Minimum Distributions (RMDs) suspended for 2020. If you have taken your RMD for 2020 already, you may want to discuss the potential benefits of returning the RMD to your IRA.

 +Relief for those paying back retirement plan loans: If you have outstanding TSP loans, you can call the administrator if you want to suspend your loan payments for up to a year. To be eligible, you must be affected by the coronavirus.

 

Sources:

RMD Plan News item: https://www.tsp.gov/whatsnew/Content/index.html#rmdchanges

RMD changes page: https://www.tsp.gov/whatsnew/Content/coronavirus/rmd-changes.html

Link to COVID portal page: https://www.tsp.gov/whatsnew/Content/coronavirus/index.html

 

 United Benefits and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.