COVID-19 and the Retirement Savings Plan

In response to the COVID-19 coronavirus pandemic, three pieces of legislation were recently enacted:

• Coronavirus Preparedness and Response Supplemental Appropriations Acts, 2020 (signed March 6) — releasing emergency funds for coronavirus testing, treatment, and small business assistance
• Families First Coronavirus Response Act (signed March 14) — providing paid sick leave, free coronavirus testing, expanded unemployment benefits, and food insecurity measures
• Coronavirus Aid, Relief, and Economic Security Act (CARES Act, signed March 27) — the largest fiscal stimulus package in U.S. history, offering economic relief for people most affected by the financial downturn

These laws contain several provisions that, together with measures introduced by the Board and our business partners, affect employee benefits provided through the Board of Pensions, including the Retirement Savings Plan of the Presbyterian Church (U.S.A.):

• Retirement Savings Plan Coronavirus Related Distributions (CRDs). Beginning April 13, eligible Retirement Savings Plan participants may take distributions of up to $100,000 from their vested accounts, if they, their spouse, or dependents are diagnosed with COVID-19, or experience COVID-19 related financial consequences as determined by the Treasury Department. Tax on the income from the distribution may be paid over three years; the amount may be repaid over three years, and the normal 10 percent penalty tax for early withdrawal does not apply. These provisions also apply to New Covenant Plan participants.
• Retirement Savings Plan loans. From April 13 through September 23, 2020, eligible Retirement Savings Plan participants may borrow the lesser of 100 percent of their vested account balance or up to $100,000 (current limit is $50,000), if they, their spouse, or dependents are diagnosed with COVID-19, or experience COVID-19 related financial consequences as determined by the Treasury Department. In addition, the loan repayment due date in 2020 is extended for one year. When payments resume, the loan will be re-amortized and could result in a higher monthly payment. These provisions also apply to New Covenant Plan participants.
• Retirement Savings Plan Minimum Required Distributions (MRDs). The CARES Act waives the requirement for participants to take a minimum distribution for calendar year 2020 for plans like the Retirement Savings Plan, allowing members to keep funds in their plans. Under current law, generally, individuals at age 72 must take a minimum distribution. If a participant has a normally scheduled minimum distribution and wants to delay receiving it, they must contact Fidelity.

Federal and state regulations are changing rapidly; the Board will continue to provide updates. For more information, call the Board at 800-773-7752 (800-PRESPLAN).