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CARES Act Provisions for PERAPlus/PERA DC Plan Participant

March 30, 2020

Updated June 24, 2020

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act. The bill provides federal support in the wake of the coronavirus public health crisis and associated economic fallout.

The CARES Act offers a variety of support to both individuals and businesses, and has three provisions that directly impact PERA members participating in the PERAPlus 401(k)/457 Plans and the PERA DC Plan. These changes include the following:

Coronavirus-related Distribution Without a Tax Penalty – PERAPlus 401(k)/457 Plans

Members can take up to $100,000 as a “coronavirus-related distribution” between January 1, 2020, and December 30, 2020. Members may spread taxes on the distribution over a three-year period. Also, there is no additional tax penalty for this early distribution. (Members in the PERAPlus 401(k) Plan are otherwise subject to a 10% penalty for any distribution prior to age 59½.)

Coronavirus-related distributions are broadly defined as distributions to an individual who:

  1. Is diagnosed with COVID-19; or
  2. Has a spouse/dependent who is diagnosed with COVID-19; or
  3. Experiences (or has a spouse or household member who experiences) adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of childcare, closing or reducing hours of a business owned or operated by the individual, having a reduction in pay or self-employment income due to COVID-19, or having a job offer rescinded or start date delayed due to COVID-19.

Members who take a coronavirus-related distribution from the PERAPlus 401(k) Plan and 457 Plan will be able to repay those distributions to their Plan Account within three years after taking the distribution.

Expanded Loans – PERAPlus 401(k)/457 Plans

Between March 27, 2020, and September 22, 2020, PERAPlus participants who are affected by COVID-19 (see the 3 situations above) can take up to $100,000 as a loan (instead of the current $50,000 maximum) and the loan amount can be up to the full account balance (rather than the current rule that restricts loans to half the account balance).

Repayment of these expanded loans, as well as existing loans, may also be delayed for one year for those participants affected by COVID-19. Contact Voya Financial for more information.

Required Minimum Distribution (RMD) Waiver – PERAPlus 401(k)/457 Plans and PERA DC Plan

Retirees and beneficiaries who have accounts in the PERAPlus Plans and/or the PERA DC Plan are not required to take minimum distributions in 2020. (This does not apply to the PERA DB Plan.) If a retiree or beneficiary has already received a distribution from Voya to satisfy the RMD for 2020, PERA may be able to accept the full amount of the distribution back to the Plan on or before August 31, 2020. Contact Voya for more information.

PERA is working with Voya Financial on logistics for these provisions and will post more information when it becomes available. To initiate a distribution or loan, please call Voya Financial at 1-800-759-7372 and select the PERAPlus/DC option.