CARES Act changes to County Deferred Compensation Plan
Published: April 14, 2020
This message is to inform you about changes to the County Deferred Compensation Program as a result of the recent passage of the CARES Act. The Act contained 3 provisions that modify the Deferred Compensation Plan (457 Plan/OBRA – Extra Help Plan) which is administered by Nationwide. The
provisions are intended to give participating employees additional financial flexibility to assist them in the event that they are directly affected by COVID-19 as defined by the CARES Act. Please note that for participants that want to take out a loan but may not qualify under the CARES Act, the county
plan already allows for loans of up to $50,000, or up to 50% of your balance, whichever is less. Please contact Nationwide for details.
The 3 provisions under the CARES Act are as follows:
Tax-favored coronavirus-related distributions (CRDs) up to $100,000 are allowed until December 31, 2020
- 10% early withdrawal tax is waived
- Ordinary income tax may be paid in equal installments over a three-year period, beginning in tax year 2020
- Participants may repay CRDs within a specified three-year period, and these repayments will not be subject to the annual contribution limits
- Participants must self-certify they meet one of the qualifications (listed below)
Expanded access to loans for 180 days after enactment of the law
- Loan limits for new loans are increased to the lesser of $100,000 or 100% of the participant’s vested account balance, as adjusted for the outstanding loan balance calculation
- For new or existing loans, participants may choose to delay loan repayments due in 2020 for up to one year
- Participants must self-certify they meet one of the qualifications (listed below) For any COVID-19 participant related requests, Nationwide will waive the imposed fees for all loan initiation, distribution or hardship withdrawals for participants in plans
where those fees may apply, effective from when the CARES Act was signed on March 27 through September 30, 2020.
Waiver of 2020 Required Minimum Distributions (RMDs) - Waives RMD payments due in calendar year 2020 – this provision only affects separated employees.
- Waives RMDs for those participants who are due to receive RMDs in calendar year 2020
- Waives RMDs for those participants whose first RMD was due by April 1, 2020, but they had not yet received their RMD by January 1, 2020
- If you have already received an RMD and want to repay it or you have an upcoming scheduled RMD that you want to stop for 2020, contact Nationwide for assistance.
- This provision does not require a self-certification.
In order for employees to take advantage of the first two provisions above, they must self-certify that they were affected in one of the following three ways:
- Diagnosed with the SARS-CoV-2 virus or with coronavirus disease 2019 (COVID-19); or
- Their spouse or dependent is diagnosed with COVID-19; or
- The employee experienced adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closure or reduction in hours of a business owned or operated by the individual
due to COVID-19.
For questions about these new provisions and how to access them, please call Nationwide at 1-866-242-5048.