The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 was signed into law on March 27, 2020. The CARES Act adds a new opportunity to receive up to a $100,000 distribution from certain retirement plan accounts if you meet qualifying circumstances related to COVID-19.
To apply for a coronavirus-related distribution (CRD), you must certify that you meet at least one of the following qualifying conditions:
- You have been diagnosed with COVID-19
- Your spouse or dependent has been diagnosed with COVID-19
- You are experiencing/have experienced adverse financial consequences as a result of:
- Being quarantined, furloughed, laid off or having work hours reduced due to COVID-19;
- Being unable to work due to lack of child care because of COVID-19; or
- Being unable to work due to the closing or reducing of hours of a business you own or operate due to COVID-19.
Eligibility depends on a variety of factors, including the qualifying conditions listed above. Here’s a breakdown by plan/program:
- Deferred Compensation Program/Judicial Retirement Account – You are eligible for a CRD at any time if you meet the qualifying conditions. You may request a CRD while actively employed or while separated from employment. To request a CRD, please contact Voya Financial, the DRS record keeper at 888-327-5596 or https://www.drs.wa.gov/rk/.
- Plan 3 – You can only receive a distribution from Plan 3 if you are an inactive member (no longer working for a DRS-covered employer). Plan 3 members requesting a withdrawal per the CARES Act must certify to the IRS at the time they file their 2020 taxes in order to take advantage of any CARES Act provisions. Please note that VOYA will withhold for federal taxes 20% from the withdrawal. Contact DRS at 360-664-7000 or 800-547-6657 with any questions.
- Plans 1 and 2 – You can only receive a CRD if you are an inactive member (that is, you are no longer working for a DRS-covered employer). If you are currently inactive and meet the CRD qualifying conditions, complete a Request for Coronavirus-Related Distribution form and return it to DRS along with Plan 1/2 Withdrawal of Retirement Contributions form.
The CARES Act waives the additional 10% tax that would otherwise be imposed on a distribution from your retirement account before reaching age 59½ . In addition, any remaining federal taxes on this distribution can be spread out over a three-year period.
Other things to know
- DRS encourages you to consult a financial or tax advisor about how a CRD will affect your individual taxes and what repayment rights you have under the CARES Act.
- CRDs do not apply to DRS annuity payments.
- CRDs are not eligible rollover distributions.