CARES Act | Coronavirus Distribution Program
Posted June 3, 2020 | Updated June 22, 2020
We are currently experiencing a high volume of requests for information about CARES Act distributions. We are processing requests on a first-come, first-served basis and will respond to you as soon as we are able. We ask that you do not send us more than one email as this will slow our turnaround time. Thank you for your patience.
In response to the COVID-19 pandemic, Congress passed the CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT (CARES Act) on March 27, 2020. The bill provides financial aid for individuals and companies. The CARES Act also has provisions allowing access to certain retirement savings as well as the suspension of age restrictions and required minimum distributions (RMD).
Under provisions of the CARES Act, the Department of Administration, Division of Retirement and Benefits (Division), in coordination with Empower Retirement, will launch a coronavirus-related distribution program for members of the Alaska Supplemental Annuity Plan (SBS-AP) and the Alaska Deferred Compensation Plan (DCP), effective June 3, 2020. A coronavirus-related withdrawal must be processed before December 31, 2020.
Qualified members of the SBS-AP and DCP plans may request an in-service distribution of 25% of their account or $25,000 maximum, whichever is less, between both plans. Qualified members who have terminated employment may request up to an amount not to exceed $100,000 from their SBS-AP and/or DCP accounts.
For more information and instructions on how to apply for a coronavirus-related distribution, qualified members can contact the Division toll-free at (800) 821-2251 or in Juneau at (907) 465-4460. Members may also send an email to email@example.com. When contacting us by email, please include identifying information such as your retirement identification number (RIN), date of birth, and whether you are active, inactive, retiring, or retired.
It is likely that Congress may consider additional measures in the days to come. The Division, along with Empower Retirement, will keep you apprised of all new developments.
Frequently Asked Questions (FAQs)
How do I know if I qualify for a coronavirus-related distribution?
Updated June 22, 2020
As authorized under the CARES Act, Notice 2020-50 expands the definition of who is a qualified individual to take into account additional factors such as reductions in pay, rescissions of job offers, and delayed start dates with respect to an individual, as well as adverse financial consequences to an individual arising from the impact of the COVID-19 coronavirus on the individual’s spouse or household member. As expanded under Notice 2020-50, a qualified individual is anyone who:
- is diagnosed, or whose spouse or dependent is diagnosed, with the virus SARS-CoV-2 or the coronavirus disease 2019 (collectively, “COVID-19”) by a test approved by the Centers for Disease Control and Prevention (CDC) (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
- experiences adverse financial consequences as a result of the individual, the individual’s spouse, or a member of the individual’s household (that is, someone who shares the individual’s principal residence):
- being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19;
- being unable to work due to lack of childcare due to COVID-19;
- closing or reducing hours of a business that they own or operate due to COVID-19;
- having pay or self-employment income reduced due to COVID-19; or
- having a job offer rescinded or start date for a job delayed due to COVID-19.
To meet qualification for the Cares Act distribution, you must certify that you are an individual:
- Who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention (CDC); or
- Whose spouse or dependent (as defined in Sec. 152 of the Internal Revenue Code (IRC) of 1986) is diagnosed with such virus or disease by such a test, or;
- Who experienced adverse financial consequences because of one or more of the following reasons:
- you are quarantined;
- you have been laid off or furloughed;
- your work hours have been reduced;
- you have been unable to work due to lack of child care;
- you have had to close or reduce working hours for the business you own or operate; or
- Other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate).
Why is DRB not offering coronavirus-related withdrawal from the PERS and TRS plans?
The Division has decided, in an effort to preserve retirement accounts and retirement readiness, to offer the coronavirus-related distributions only for the DCP and SBS-AP plans.
Will the Division be offering plan loans from member DCP and SBS-AP accounts?
No, there will not be a plan loan offering, however, there is a repayment option available if desired (see FAQ below.)
How will market fluctuations affect withdrawals for 25%?
If you are eligible only to receive 25% of your account balance, the Retirement Counselor will indicate the amount determined to be 25% on the distribution form. The Division understands that due to market fluctuations, the amount may or may not be 25% of your account balance. Twenty-five percent or $25,000 is well below the CARES act threshold; therefore, the amount determined by the Retirement Counselor when completing the form will be the amount distributed, regardless of subsequent market fluctuations.
Can I choose which account (SBS-AP or DCP) that the 25% or $25,000 is distributed from?
Yes, the total of both accounts determines whether your available amount is capped at 25% or $25,000. You may then choose whether to withdraw that amount from your SBS or DCP account. For example, if you have $10,000 in your DCP and $20,000 in your SBS-AP, your maximum withdrawal is $7,500. You may choose to withdraw the entire $7,500 from your DCP account, or entirely from your SBS-AP account. We prefer you choose to withdraw from one account only, but you may withdraw a portion from each account as long as the amount does not exceed $7,500.
What if I already submitted a distribution request to Empower?
If you have a distribution request in process, please let your Retirement Counselor know. They can put a hold on the approval process if it has not already occurred.
Once it is determined that the distribution has not been approved, you should then contact Empower Retirement at (800) 232-0859 to petition that your distribution request be cancelled. If the distribution has already been approved, it will be too late to stop the request and the distribution will not be coded as coronavirus-related. The Division’s understanding is that when you file your federal income tax return for 2020, the benefits related to a coronavirus-related distribution may be available then. Contact your tax advisor for more information.
What if I do not have access to a notary?
If you need assistance in obtaining a notary for the spousal consent section of the SBS-AP coronavirus-related withdrawal form, check your local bank, the US Postal Service, or online.
My spouse is incapacitated and therefore unable to sign for spousal consent. What can I do?
The IRS requires that members obtain spousal consent for withdrawals from a qualified plan if the account balance is greater than $5,000. If the incapacitated spouse has a power of attorney (POA), please provide the POA document to the Division for review; it may allow the POA to sign for spousal consent.
I am an employee of a participating employer, and I participate in the SBS-AP plan. Why can’t I make a $100,000 withdrawal like a retired friend of mine?
In-service (while still employed) withdrawals are limited to 25% or $25,000, whichever is less. Members who have terminated employment may make a coronavirus-related withdrawal of up to $100,000.
May I repay this distribution in the future?
Yes, you may re-contribute any portion or all of this coronavirus-related withdrawal within three years of receipt. The logistics of this process is still in the process of being determined.
If I take a coronavirus-related distribution from my DCP account, will my active ongoing contribution elections remain intact?
Yes, your ongoing contribution elections will remain in effect.
Will my withdrawal be taxed?
Yes. Your entire coronavirus-related withdrawal amount will be reported as taxable income in the year you receive it. Federal tax on this qualified withdrawal will be included in your gross income equally over the three-year period beginning with the year you receive the funds, unless you elect to pay the entire amount of federal taxes due in the year distributed.
How is tax withholding calculated?
Since your coronavirus-related withdrawal is not eligible for rollover, it is not subject to the mandatory 20 percent federal tax withholding. The default federal withholding is 10 percent. If you do not make a selection on your withdrawal form, the default amount will be withheld. Any state tax withholding is based on your state of residence.
Do I have to pay the 10% additional tax on a coronavirus-related distribution from my SBS-AP or DCP accounts?
No, the 10% additional tax on early distributions does not apply to any coronavirus-related distribution. Distributions from your DCP account are not subject to the 10% additional tax, whether it is a coronavirus-related distribution or a normal distribution.
What if I would like to withhold more than the default amount?
If you would like to withhold more than the default, you may enter the percentage or dollar amount you want withheld on the withdrawal form. The percentage or dollar amount entered for federal withholding cannot be less than 10% of your withdrawal.
How will I receive my distribution?
The process for paying your distribution is as follows:
- If your distribution is approved, the normal turnaround time is 5-8 business days until you receive your check (based on your election).
- If your banking information is already set up with Empower Retirement and you have elected to receive the distribution via direct deposit, the turnaround time is to 3-5 business days. You can set up your banking information on the Empower website or by calling an Empower representative at (800) 232-0859.
- However, if you have recently updated your banking information with Empower, your distribution will default to the regular mail option, since Empower Retirement requires 15 days to verify banking information. In this case, express mail may be a better option for you.