Information on Additional Retirement Account Options due to COVID-19

April 16, 2020Posted in: Faculty/Staff

Dear Retirement Plan Participants,

Due to the continually evolving situation surrounding the COVID-19 pandemic, we wanted to make you aware of new retirement plan provisions available to you as a result of the passing of the CARES Act, which was signed into law on March 27, 2020. These provisions are permissive, meaning retirement plan providers must elect to adopt them. The university has elected to adopt some of these provisions, as it has determined that there are components of this legislation that may be of assistance to participants in the Illinois Institute of Technology Retirement Plan. These provisions became effective as of April 13, 2020, and they will, as noted below, be in effect for only a limited time. The specific opportunities are summarized below, and these summaries are based on currently available information. Please understand that this situation is fluid, and additional clarification and details will likely be issued by regulatory agencies in the coming days. This may necessitate changes that differ from the summaries, which, as noted, are based on current information. Please access this link to go directly to the COVID-19 Benefits area of the HR Portal, which will be updated as additional information becomes available. 

Retirement Plan Withdrawals Without Penalty

Eligible participants (as defined below) will be eligible for withdrawals of up to $100,000 for coronavirus-related expenses without the 10% early withdrawal penalty normally assessed on withdrawals made by individuals under age 59 ½.

  • The $100,000 maximum is the aggregate dollar limit permissible across all retirement plan accounts. Participants with balances at both TIAA and Fidelity are responsible for ensuring they do not exceed the $100,000 total limit and will be required to document and self-certify any withdrawal request.
  • The distribution will be subject to taxation, but under the Act, participants have the option of paying taxes over a three-year period. The tax implications of any withdrawal are unique to that individual and dependent upon their particular circumstances. Thus, individuals are strongly advised to consult with their tax advisor before making any withdrawal.
  • The distribution may, but is not required to, be repaid at any time up to three years after it is taken. Repaid funds will be treated as a rollover and will not be included in gross income or the annual IRS contribution limits.
  • Coronavirus-related distributions can be initiated through December 31, 2020.

Retirement Plan Loan Maximums Increased

Eligible participants will be able to take increased loan amounts for eligible coronavirus-related expenses. Loan maximums for these expenses increase from half of the account balance (capped at $50,000) to all of the account balance (capped at $100,000).

  • Loan repayment for new qualified loans and existing loans may be suspended for up to one year. The delay period is not considered for applying the five-year maximum repayment term applicable to plan loans. However, the CARES Act does extend the due date of any qualified individual’s loan repayment that would otherwise be due during 2020 (but on or after the date of enactment) for one year.
  • The increased loan provision is available for 180 days following the CARES Act effective date of March 27, 2020, which means the last date to apply for this type of loan is September 23, 2020.

Who is eligible for these new provisions (an Eligible Participant)?

  • Any individual who has been diagnosed with COVID-19 by a test approved from the Centers for Disease Control and Prevention
  • Any individual who has a spouse or dependent who has been diagnosed with COVID-19 by a test approved from the Centers for Disease Control and Prevention
  • Anyone who suffers financial consequences as a result of quarantine, employment furlough, layoffs, reduced work hours, or cannot work due to lack of child care as a result of coronavirus
  • Anyone who experiences a financial loss to an individually owned or operated business that is caused by a closing or reduction of hours due to coronavirus

What certification is required from Eligible Participants? 

Eligible Participants will be required to self-certify, electronically or via phone, that they fall into one or more of the categories listed above.

Where can I find additional information? 

If you believe you are eligible for assistance due to the COVID-19 pandemic and would like additional information, please reach out to TIAA and/or Fidelity directly:

The above provisions highlight options that will soon be available through the Illinois Institute of Technology Plan only; they do not apply to other employer-sponsored retirement plans. Additionally, the broader stimulus package includes a variety of personal, health care, unemployment, and other measures that may provide additional relief depending on your individual circumstances. 

We hope that these opportunities provide, to those in need, some relief and reassurance during this uncertain time.

If you have any questions about the retirement plan in general, or if you have any other benefits-related questions, please reach out to Human Resources at hr@iit.edu or at x7.3318. 

Hilary Hudson Hosek

Associate Vice President, Human Resources

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