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 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, please contact DRS at 360-664-7000 or 800-547-6657.
- 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.