This article was updated on June 30, 2020, with additional guidance from the IRS.
On May 21, 2020, the UC Board of Regents voted to implement provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) designed to make it easier for participants to access funds from their retirement savings plans. These optional provisions required approval from the Regents, who are responsible for overseeing the UC Retirement Savings Program (which includes the Defined Contribution Plan, Tax-Deferred 403(b) Plan, and 457(b) Deferred Compensation Plan).
The IRS released further guidance on these provisions on June 19, 2020, including expanding the categories of eligible participants. In particular, the definition of a “qualified individual” eligible for a COVID-related retirement plan distribution or loan has been expanded to include any member of your household who experiences adverse financial consequences as a result of COVID-19. The individual must share your principal residence.
To stay up to date on continuing changes, be sure to check UCnet and Current News on myUCretirement.com regularly for updates.
What you need to know
Who qualifies?
The CARES Act is designed to help by extending access to loans and withdrawals from employer-sponsored retirement savings plans like UC’s voluntary plans. Eligible participants include:
- You, your spouse or your dependent who is diagnosed with COVID-19*
- You, your spouse or someone who shares your principal residence who experiences adverse financial consequences as a result of COVID-19
* You must self-certify that you, your spouse or your dependent (as defined in Internal Revenue Code section 152) is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (both referred to as “COVID-19”) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act).
If you or a dependent are diagnosed with the virus SARS-Co-V-2 or with coronavirus disease 2019 (COVID-19), or you experience adverse financial consequences as a result of the virus or disease, the CARES Act is designed to help by extending access to loans and withdrawals from employer-sponsored retirement savings plans like UC’s.
Withdrawals from the UC 403(b), 457(b) and DC Plan
- The CARES Act allows you to withdraw 100% of your own vested balances up to $100,000 (whichever is less) from your UC 403(b), 457(b) plan, or DC Plan account.
- You won’t owe the customary early withdrawal penalty when you withdraw under the CARES Act provision.
- You are still subject to federal income tax on your withdrawal, butit can be spread out evenly over three years. Check with your state tax board for more information about how this applies to your state income taxes.
- You may also repay all or part of your CARES Act withdrawal within three years and, if you do, your repayment won’t be subject to the annual IRS contribution limit. That means it won’t affect the amount you would normally contribute to your UC plan.You may also have an opportunity to recover the income taxes that you originally paid with respect to your CARES Act distribution.
- CARES Act withdrawals are available until December 30, 2020.
403(b) Plan Loans
- The CARES Act increases the maximum amount you can borrow from your UC 403(b) Plan. This increase is available until September 22, 2020 (180 days since the CARES Act was enacted). Currently, you can borrow up to 50% of your total UC Retirement Savings Program account balance up to $50,000. Under the CARES Act, you can borrowup to 100% of your vested 403(b) plan balance up to $100,000, whichever is less. Note: If you’ve taken a loan in the past 12 months, the amount you can borrow will be reduced by the highest outstanding loan balance.
- If you are currently repaying a UC 403(b) Plan loan or request a CARES Act loan, you can delay your repayments until after December 31, 2020.
What qualifies as adverse financial consequences?
To qualify for a CARES Act withdrawal or loan, or to delay a loan repayment, you must self-certify that you, your spouse or someone who shares your principal residence faced at least one of the following adverse financial consequences as a result of COVID-19:
- Being quarantined, furloughed or laid off, or having work hours reduced
- Being unable to work due to lack of childcare
- A reduction in pay (or self-employment income)
- Having a job offer rescinded or start date for a job delayed
- Closing or reducing hours of a business owned or operated by you, your spouse or a member of your household
Important considerations
Weigh the consequences on your future financial security before you tap into your UC retirement savings accounts, especially in volatile markets. If you have access to other means of funding, such as home equity, a family member, or other viable sources of short-term cash, consider these options as well.
Call Fidelity at1-866-682-7787to request a withdrawal or loan, or to delay your current loan repayments.
Where to go for more information
- To understand UC 403(b) Plan loans, readHow 403(b) Plan Loans Work.
- To learn more about the CARES Act or find updates on its provisions, visitirs.gov.
- If you have questions about the CARES Act or need guidance on accessing your retirement funds through these provisions, call a UC-dedicated Fidelity Retirement Planner at1-800-558-9182.
FAQs
You may request an in-service withdrawal if you are either age 59.5 or have a financial hardship. 457(b) Plan.
What is the CARES Act for retirement withdrawal? ›
401(k) and IRA Withdrawals for COVID Reasons
Section 2022 of the CARES Act allows people to take up to $100,000 out of a retirement plan without incurring the 10% penalty. This includes both workplace plans, like a 401(k) or 403(b), and individual plans, like an IRA.
Can I borrow from my UC retirement? ›
Loans are available from UC Fund Menu balances. Call Fidelity® Retirement Services to choose the funds from which to take your loan. If you do not choose the funds, the loan will be taken pro rata across all funds in your account.
Is an UC retirement plan mandatory? ›
The voluntary UC Retirement Savings Program offers convenient, tax-advantaged options for building your savings. On this page: UC's retirement savings plans. Contribution limits.
How do I withdraw money from my deferred compensation plan? ›
You can process a distribution request by logging in to your account and navigating to Loans & Withdrawals > Taking a Withdrawal > Request a Withdrawal. If you have questions about distributions, call the Service Center at 844-523-2457.
How do I withdraw from DCPP? ›
You can't withdraw the money in a DCPP before you retire. The earliest retirement age depends on the plan and is typically 10 years before the normal retirement age. So, if the normal retirement age is 65, the earliest you can retire and withdraw money from the plan is age 55.
What is the COVID disaster relief retirement withdrawal? ›
A coronavirus-related distribution is a distribution that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $100,000 from all plans and IRAs.
Can I still take a COVID hardship withdrawal from my 401k? ›
A coronavirus-related distribution is a distribution made from an eligible retirement plan (including an IRA) to a qualified individual from Jan. 1, 2020, to Dec. 30, 2020, up to a combined limit of $100,000 from all plans and IRAs. A workplace retirement plan is not required to offer coronavirus-related distributions.
Can I pull money out of my retirement? ›
You can withdraw money from your IRA at any time. However, a 10% additional tax generally applies if you withdraw IRA or retirement plan assets before you reach age 59½, unless you qualify for another exception to the tax.
Does a UC pension affect Social Security benefits? ›
If you are in the 1976 Tier and your UC employment is covered by Social Security, your basic retirement income is reduced slightly to account for the Social Security taxes that UC has paid on your behalf. If you retire before age 65, UCRP provides a monthly temporary supplement that restores the full benefit amount.
401(k) loans
Depending on what your employer's plan allows, you could take out as much as 50% of your vested account balance or $50,000, whichever is less. An exception to this limit is if 50% of the vested account balance is less than $10,000: in such a case, the participant may borrow up to $10,000.
Can I borrow from my retirement to pay off debt? ›
In some cases, you might be able to withdraw funds from a 401(k) to pay off debt without incurring extra fees. This is true if you qualify as having an immediate and heavy financial need, and meet IRS criteria. In those circ*mstances, you could take a hardship withdrawal.
What is the UC pension Cola for 2024? ›
Effective July 1, 2024, the COLA rate is 2.00% for those with a retirement date on or before July 1, 2023. The COLA for UC-PERS Plus 5 benefit recipients is also 2.00% (set as the same as the COLA for UCRP benefit recipients with a retirement date of October 1, 1991).
Can I take money out of my UCRp? ›
Please note: If you are vested in UCRP and take a refund of your plan accumulations, you will no longer be eligible for future retirement benefits. Retirement income: If you meet the criteria of your pension tier, you can elect to retire and receive a monthly lifetime benefit or, in some cases, a lump sum cashout.
What are the supplemental UC retirement plans? ›
The supplemental UC Retirement Savings Program—the 403(b), 457(b), and DC Plans—provide three options to help you build additional retirement savings to augment your primary UC retirement benefits, Social Security, and other non-UC retirement income.
At what age can you withdraw from 457 without paying taxes? ›
Differences Compared With 401(k) and 403(b) Plans
Unlike 403(b) and 401(k) accounts, participants can take regular withdrawals from 457 plans as soon as they retire, regardless of whether they have reached age 59½. These distributions are taxed as regular income, but the 10% early withdrawal penalty is never applied.
Do UC schools care about withdrawals? ›
What You Should NOT Worry About. An occasional withdrawal (“W” grade) is not a big deal; the UCs simply disregard them during admission evaluation (however, you MUST report every W grade you have received on your UC Application).
Can I withdraw from my 457 while still employed? ›
While you are employed, your employer may permit you to take a withdrawal from your 457(b) plan due to an unforeseeable emergency. All unforeseeable emergency withdrawal requests will be reviewed in accordance with the plan's procedures for a determination as to whether the withdrawal is permitted.
Can I withdraw my UC application? ›
After logging in to the portal, students can complete a “Withdraw application request” under the “Account tools” section. Applicants should submit an application withdrawal request online using their name, UC application ID and email address. Applicants should log in to their applicant portal.
