SECURE Act and NYSDCP
Late last year, the Setting Every Community Up For Retirement Enhancement (SECURE) Act was passed, with most provisions effective January 1, 2020. The new law effected Plan participants mainly in the area of required minimum distributions (RMDs.) It increased the RMD age to 72 and shortened the period of time a non-spouse beneficiary may receive payments. However, the CARES Act of 2020, discussed below, suspended RMDs for all of 2020. There are also other provisions of the law that the Board will be reviewing during the year. Please check the Plan Web site periodically for updates.
CARES Act and NYSDCP
On March 27, 2020, the Federal government signed into law The Coronavirus Aid, Relief and Economic Security Act (CARES Act), a $2 trillion stimulus bill aimed at helping the people, states and businesses devastated by the COVID-19 pandemic.
There are certain provisions of the CARES Act that impact the Plan in three areas:
- Required Minimum Distributions (RMDs)
- Distributions, and
Required Minimum Distribution (RMD) Rollovers Extended Under New Rules
The SECURE Act and CARES Act provided relief to participants from having to take RMDs in 2020. The normal 60-day RMD rollover periods have now been extended:
|RMD Receipt Date||Can I roll over my RMD?||Rollover Eligibility Period|
|January 1, 2020 - July 2, 2020||Yes||At any point up to August 31, 2020|
|July 3, 2020 - December 31, 2020||Yes||Within 60 Days from Date of Receipt|
For qualifying individuals only, distribution amounts up to $100,000 can be made anytime from 1/1/2020 to 12/31/2020.
- There is a $100,000 limit per person
- The $100,000 limit is aggregated for all plans under an employer
- Federal income taxes can be paid in the year of receipt or over three years
- No income tax withholding is required but is optional
- There is no 10% penalty tax regardless of age
- The participant must self-certify their status as a qualified individual
- The participant may repay the distribution within three years of receipt back to the NYSDCP or another eligible plan
It is important that any participant considering taking these distributions consult with their tax and other advisors.
For qualifying individuals only, outstanding loan payments, as of enactment date to 12/31/2020 receive an additional full year extension by completing the necessary form.
Interest will continue to accrue on delayed payments.
The standard loan provision for the Plan remains in effect. Read more information about a loan from your Plan account.
Participants must self-certify as a “qualified individual” to eligibility on the corresponding form the be eligible for the COVID Distribution or defer loan payments.
Qualified individuals are participants:
- diagnosed with COVID-19;
- whose spouse or dependent was diagnosed with COVID-19; or
- who experiences adverse financial consequences as a result of being quarantined, furloughed or laid off (including reduced work hours) or is unable to work due to lack of child care because of COVID-19.
Things to remember about your retirement planning
Any loans or withdrawals could impact your retirement nest egg. Never lose sight of the long-term impact they can have on your retirement. History tells us the markets will return, and if you take yourself out of the market now, it may prevent you from benefiting from future upside.
It’s important to weigh all available options to address your immediate financial needs while still being thoughtful about your future financial well-being.