Retirement Account Changes
New Flexibility for BSA Retirement and 401(k) Plans as a Result of CARES Act
On March 27, the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act. This enabled Brookhaven Science Associates, LLC (BSA) to provide employees with additional access to your BSA 401(k) Plan account if you have suffered adverse financial effects related to the pandemic. This notice describes generally the terms of the new coronavirus-related distributions ("CV Distributions") and loans ("CV Loans") as well as relief for existing loans that may be available through the BSA 401(k) Plan. Additional information, including restrictions, may apply. This notice also describes a change to the "required minimum distribution" (RMD) rules for 2020 for both the BSA Retirement Plan and the BSA 401(k) Plan.
Investments can be volatile these days, and any withdrawal or loan from a BSA 401(k) Plan account could adversely impact ultimate retirement readiness. Employees considering a CV Distribution and/or CV Loan should consult with a personal financial advisor before applying for a distribution or loan. In addition, information about BSA 401(k) Plan accounts, including available investment education and advice, is available at TIAA.org.
Who is Eligible?
To be eligible for CV Distributions and CV Loans through the BSA 401(k) Plan, or for existing loan relief, you must experience one of the following coronavirus-related events:
- You are diagnosed with the SARS-CoV-2 virus or with coronavirus disease 2019 (COVID-19), or
- Your spouse or dependent is diagnosed with the virus or disease, or
- You experience adverse financial consequences stemming from the virus or disease as a result of being quarantined, furloughed, laid off, having reduced work hours, being unable to work due to lack of child care, or the closing or reduction of hours of a business owned or operated by you, or
- Other factors as determined by the Secretary of the Treasury or his delegate.
CV Distributions of up to $100,000 are now available under the BSA 401(k) Plan until December 31, 2020. The following information applies:
- CV Distributions are not subject to the 10% federal tax penalty that normally applies to withdrawals before age 59½.
- CV Distributions are not subject to the 20% federal tax withholding that normally applies, although you have the option to have taxes withheld. You should review your state's tax withholding requirements.
- Although a CV Distribution is still taxable income for you, you may spread the taxes over a three-year period. This may help you manage the tax impact of the CV Distribution.
- You may repay your CV Distribution amount in one or more payments to an eligible retirement plan, including the BSA 401(k) Plan or an IRA, within three years of the CV Distribution (and those repayments will not be subject to that retirement plan's contribution limits).
- You will be required to self-certify that you meet the eligibility requirements for a CV Distribution.
When deciding whether to request a CV Distribution, you may want to consider:
- Other resources available to you (e.g., a BSA 401(k) Plan loan).
- The potential impact on your BSA 401(k) Plan account of liquidating investments in the current volatile market environment.
- The possible impact of such a distribution on your future retirement readiness.
CV Distributions are not applicable to the BSA Retirement Plan as the CARES Act does not apply to such money purchase plans.
Special Loan Rules
CV Loans are now available under the BSA 401(k) Plan until September 23, 2020. The following information applies:
- You may take a CV Loan amount up to the lesser of $100,000 or 100% of your vested account balance
- Loan repayments that would otherwise be due in 2020 for your CV Loan can be delayed for up to one year. If you delay your CV Loan repayments, your loan repayment amount will be higher.
- You will be required to self-certify that you meet the eligibility requirements for a CV Loan.
The maximum number of outstanding loans allowed by the BSA 401(k) Plan is being temporarily increased from three to five to accommodate CV loans.
In addition, if you have an outstanding BSA 401(k) Plan loan on or after March 27, 2020, your loan repayments otherwise due in 2020 can be delayed for up to one year. After that one-year period ends, your loan will be re-amortized to reflect any delayed payments, adjusted for interest. As a result, your loan repayment amount may be higher than it is today.
CV Loans are not applicable to the BSA Retirement Plan as the CARES Act does not apply to such money purchase plans.
Required Minimum Distributions (RMDs) in 2020
Generally, if you were born on or before June 30, 1949, you were required to take an RMD in 2020, unless you were still employed with the company and such RMDs were not eligible for rollover. However, the CARES Act enables you to do the following:
- If you already have an RMD payment scheduled for 2020, you have the flexibility to cancel it, and TIAA will restart it automatically in 2021.
- If you have already started receiving your RMD in 2020, you have the option to repay it as a rollover. If checks have already been sent to you from TIAA, you have 60 days to roll over those funds into a plan that accepts rollovers or into an IRA. In past disaster scenarios, the IRS has extended that rollover period. TIAA will monitor regulatory activity and notify clients if an extension is granted.
- If you have not set up your RMD for receipt in 2020, TIAA cannot set up new RMD payments for you. If you need additional money from the BSA 401(k) Plan, you may instead consider taking a withdrawal.
If you meet the eligibility criteria detailed above, want to speak to a financial consultant, or want to request distributions or loans, you can do so by logging in to your online account at TIAA.org or calling TIAA at 855-400-4294. You can also visit http://TIAA.org for more information on the provisions of the CARES Act and other changes to consider. We recommend reviewing all of your options prior to making a decision.