The CARES Act stimulus package offers some relief from the economic effects of coronavirus

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is designed to bring financial relief for individuals and families. Be sure to read through the details and eligibility requirements below.
KEY HIGHLIGHTS INCLUDE
  • Individual recovery checks and student loan relief
    available
  • 2020 RMDs are allowed to be canceled
  • Retirement plan withdrawals expanded with penalties waived*
  • Retirement plan loan limits increased*

Things to consider before taking loans and distributions from your retirement plan

 
 
 
Who is eligible for withdrawals and loans?
 
*Please note, these CARES Act provisions may not be available in your Plan.
Reminder: Tax Day is July 15th. Find forms in our Tax Center.
Important Considerations

Take advantage of the CARES Act before borrowing from your plan

Qualified taxpayers will receive direct stimulus recovery payments of up to $1,200 for individuals or $2,400 for married couples filing a joint return, with amounts increasing by $500 for every child. These amounts begin phasing out when individuals have $75,000 in adjusted gross income or couples filing jointly earn $150,000. The direct payments are not available for individuals and couples filing jointly who have adjusted gross incomes of $99,000 and $198,000, respectively.
 
Borrowers through the federal student loan program may suspend monthly student loan payments without penalty through September 30, 2020. Students may retain Pell grants if they must leave school due to coronavirus closures.
 
In addition to CARES Act relief measures, the Treasury has also extended federal tax filing and IRA contribution deadlines. The deadline for filing a 2019 federal tax return—and any corresponding 2019 IRA contributions—has been extended to July 15, 2020.
 
Learn more from TIAA Bank about the CARES Act
REQUIRED MINIMUM DISTRIBUTIONS

You may be able to cancel your 2020 RMD

To help provide relief for retirees, the CARES Act allows you to cancel 2020 required minimum distributions (RMDs) for distributions from 401(a), 401(k), 403(a), 403(b) and governmental 457(b) retirement plans and IRAs.
 
If you already have an RMD payment scheduled for this year, you have the flexibility to cancel it for 2020.  TIAA will restart it automatically in 2021.
 
Frequently asked questions

To cancel your RMD payments for the remainder of 2020, visit the Manage Transactions  page. TIAA will restart it automatically in 2021.

In this situation, you have the option to repay it back into a plan that accepts rollovers or into an IRA. Please note that this only applies to RMDs made in 2020 and rolled over by August 31.

RMDs are not required for 2020, and may not be requested per the CARES Act legislation, however, you may be able to take a cash withdrawal per your plan's rules.
RETIREMENT PLAN WITHDRAWALS

Penalties and withholding will be waived for qualified distributions from retirement plan accounts

The CARES Act waives the 10% early withdrawal penalty and 20% withholding for coronavirus related distributions of up to $100,000 across all qualified retirement plans (if your plan allows - some annuity contracts may have withdrawal restrictions1) and Individual Retirement Accounts (IRAs). 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 recontribute within three years regardless of that year’s contribution limit. This will make it easier for you to replace the amount of your distribution in your retirement account.
 
Please note, this CARES Act provision may not be available in your Plan.
 
To request a coronavirus related distribution, please call us at 855-400-4294.
 
Frequently asked questions

When you request a coronavirus-related distribution (also referred to as a withdrawal) or loan, you will be asked to self-certify (or attest) that you meet an eligibility requirement.

You may take up to an aggregate of $100,000 in coronavirus-related withdrawals from eligible retirement plan accounts and IRAs. The distribution can be made through December 31, 2020.

Please review the following tax and penalty information to help you determine if you should take a coronavirus-related withdrawal:
 
  • The 10% early withdrawal penalty is waived.
  • There is no 20% mandatory federal tax withholding required at the time of distribution.
  • Withdrawals will be taxed based on whether you originally contributed money to your account before or after paying taxes on it. With a pretax account, your contributions, any employer match and earnings are taxable. For after-tax accounts, you already paid taxes on contributions, so only earnings are taxable.
  • You can spread your tax obligation over three (3) years unless you elect immediate taxation. We suggest you consult with your personal tax advisor.

The act also allows you to recontribute within three years regardless of that year’s contribution limit. This will make it easier for you to replace the amount of your distribution in your retirement account.
 
For example, you take a $22,000 distribution under the CARES Act in 2020. In 2022, you have enough money to recontribute the entire $22,000 to your account, and the annual contribution limit for 2022 is $20,000. That year, you can contribute the entire $22,000 to your account.
 
Not all accounts may be eligible for coronavirus-related distributions or advances. Contact TIAA for further information.
RETIREMENT PLAN LOANS

Retirement plan loan limits are increased

If you qualify based on coronavirus-related eligibility, maximum loan limits are increased from $50,000 or 50% of vested account balances to $100,000 or all of the vested account balance made within 180 days of enactment. While this provision increases the loan amount allowed by the federal government, your opportunity to take loans from your workplace retirement plan will depend on the plan rules set by your employer.
 
If you have existing retirement plan loan payments you may be able to defer payments for one year.
 
Please note, this CARES Act provision may not be available in your Plan.
 
Frequently asked questions

The eligible maximum loan limits have increased from $50,000 or 50% of vested account balances to $100,000 or all of the vested account balance. Collateralized loan limits will be lower. Your plan must allow loans, and you must meet a coronavirus-related eligibility requirement to take this type of loan. Any coronavirus-related loans must be initiated between March 27 and September 23, 2020.

Not all retirement plans permit loans. Additionally, your plan has the option to limit the number of loans or the amount you may borrow, and any such restrictions are not affected by the CARES Act.

If you will be repaying an existing retirement plan loan as of the CARES Act effective date of March 27, 2020, through December 31, 2020, you may elect to suspend payments for up to one year.

Your employer’s retirement plan rules will determine how many loans you can have at one time. From a repayment standpoint, you should note that payments from multiple loans may be greater than payments from one loan.

Depending on your employer’s plan rules, you may be allowed to continue making payments after you leave your job or may be required to repay the outstanding loan in a lump sum.

Existing loan payments may be suspended through the end of the 2020 calendar year.  Payments will begin again in January 2021. Go to Ongoing Transactions  and click on view/modify to suspend your loan. If you have multiple loans, you will have to take these steps for each repayment you wish to suspend.

TIAA supports this effort to help Americans who are experiencing the impacts of coronavirus, and is working to help individuals, families and organizations navigate this period of uncertainty.

We will continue to update information as it becomes available, and help you understand how to use this relief and put a plan in place to keep your retirement goals on track.
 
If you need to know which CARES Act options are available for your TIAA accounts, please call us at 855-400-4294.
1 TIAA Traditional accounts in Retirement Annuity, Group Retirement Annuity, and Retirement Choice contracts are not eligible for coronavirus-related distributions. Some Transfer Payout Annuity (TPA) contracts may be eligible for a TPA advance.  Please contact TIAA for further information. 
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