The University of Nebraska is making certain changes to its retirement plans pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act was enacted in response to the novel coronavirus (COVID-19) pandemic and economic downturn.
You may request a coronavirus-related distribution (“CRD”) from the University of Nebraska Tax Sheltered Annuity Program (the “403(b) Plan”) if you meet one of the following conditions:
- you, your spouse, or your dependent are diagnosed with the virus SARS-CoV-2 or with COVID-19; or
- you experience adverse financial consequences as a result of the virus SARS-CoV-2 or COVID-19 (e.g., quarantine, furlough, layoff, reduction of work hours, or inability to work due to lack of child care or business closure).
Both current participants and terminated employees with an account in the 403(b) Plan are eligible for a CRD. You must request and receive a CRD no later than December 31, 2020. You may request a CRD up to the lesser of: (i) 100% of your vested applicable account balance, or (ii) $100,000. You may request more than one CRD during 2020, but the total amount must not exceed these limits.
For CRDs, the CARES Act waives the 10 percent (10%) early withdrawal tax penalty that would generally apply for early distributions.
In addition, CRDs are not subject to mandatory federal income tax withholding at the time of distribution. Unless you elect otherwise, one-third of the CRD will be included in your gross income in each of the following years: 2020, 2021, and 2022. You may repay the CRD, in part or in whole, to the 403(b) Plan as a rollover contribution at any time within three years after the CRD is received.
New Coronavirus-Related Loans
If you are eligible for a CRD (see requirements above), you may request a new coronavirus-related loan (“CRL”) from the 403(b) Plan. You must certify that you meet at least one of the conditions for a CRD.
Both current participants and terminated employees with an account in the 403(b) Plan are eligible for a CRL. The CRL must be made no later than September 23, 2020. In general, you may request a CRL up to the lesser of:
(i) 100% of your vested applicable account balance, or (ii) $100,000. Any existing loans under the 403(b) Plan, the University of Nebraska Retirement Plan, or the University of Nebraska Retirement Plan for Federal Retirement System Participants will decrease the amount available for the CRL loan. The minimum loan amount is $1,000.
You may have two loans outstanding from the 403(b) Plan, one of which is a CRL and, the other, a loan under the 403(b) Plan’s current terms.
Unless you elect otherwise, no payments on the CRL will be due during the period between the date of the CRL and December 31, 2020, although interest will accrue. TIAA will not require CRL payments to commence until one year after the date of the CRL, while Fidelity will require CRL payments to commence on January 1, 2021.
Waiver of RMDs for 2020
All required minimum distributions (“RMDs”) required to be made in calendar year 2020 are waived for the 403(b) Plan, the University of Nebraska Retirement Plan, the University of Nebraska Retirement Plan for Federal Retirement System Participants, and the University of Nebraska 457(b) Deferred Compensation Plan. This provision applies regardless of whether you meet the requirements for a CRD.
If you have established automatic or recurring payments, you will need to contact either TIAA and/or Fidelity to request a modification or deferral of your 2020 RMD.
If you already received a RMD during 2020, you may be able to rollover the RMD to avoid the distribution being treated as taxable in 2020. Since there are currently timing limitations on this option, you should contact TIAA or Fidelity quickly if you are interested. Contact information for TIAA and Fidelity is set out below.
Application and Assistance
You may request a CRD or CRL by completing the CARES Act Application. The CARES Act Application should be submitted to the participant’s Campus Benefits Office for review by the University of Nebraska Central Administration. If the application is authorized by the University of Nebraska Central Administration, the participant will initiate the CRD or CRL, as applicable, by contacting either: