CARES Act / SRP Membership Update
Wednesday, April 1, 2020

In response to the coronavirus pandemic, the Trustees of the Supplemental Retirement Plan (SRP) have been actively considering ways to assist our members. In that connection, and as you have certainly heard by now, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on March 27.  Under that new law, “Coronavirus-related distributions” are handled differently than other distributions made from retirement plans, such as the SRP.  For purposes of the SRP, a “Coronavirus-related” distribution is a distribution that is an in-service withdrawal that:

  • Is taken between March 1, 2020 and December 31, 2020.
  • Does not (in the aggregate) exceed $100,000.
  • Is taken because the participant and/or the participant’s spouse or dependent has COVID-19, or is taken because the participant is suffering financial difficulty due to layoff, reduced hours or quarantine due to the COVID-19 pandemic.

Coronavirus-related distributions get the following tax relief:

  • Waiver of 10% early distribution excise tax
  • Not subject to the normal (i.e., 20%) tax withholding rules that typically apply (although the distribution is subject to 10% tax withholding, which participants can elect to waive)
  • Participants may, but are not required to, repay to the plan a Coronavirus-related distribution.If they choose to do so, the amount will be repaid on a pre-tax basis (and will not be included in the participant’s gross income).Participants have three years to repay the distribution.
  • Unless repaid, the distribution is considered to be taxable gross income.Participants who do not repay the distribution will have the income tax spread over 3 years, unless they elect to pay the entire tax in the first tax year.

Please note that Coronavirus-related distributions may not be rolled over to another retirement plan or IRA.

As set forth in the next paragraph, any participant who does not meet these tests will still be able to obtain a maximum of two (2) in-service withdrawal distributions under the Plan in 2020; however, any such distribution(s) will not be eligible for the favorable tax treatment given to Coronavirus-related distributions under the CARES Act.

Because of the sudden onset of this pandemic, the SRP Trustees have amended the SRP to permit a second in-service withdrawal if taken between March 1 and December 31, 2020.  The SRP has further been amended to provide that the Plan provisions which provide that if the Participant has not participated in the Plan for at least five years, he may withdraw an amount not exceeding the value of that portion of his Individual Account that is attributable to Employer Contributions made on or after January 1, 1989, minus the Employer Contributions made on his behalf during the immediately preceding two year period, will not apply.

Finally, the Fund Office is working with Mass Mutual to design an application form for a Coronavirus-related distribution.  Please be patient.  We will notify you when the application form becomes available.

If you have questions regarding the SRP, please contact the Benefit Funds office at (267) 350-2600.

 

Vacation Benefits

Because of the pandemic, the Welfare Fund Trustees have decided to issue vacation benefit checks this year in May, rather than in June.  Those checks will be issued in early May and will be based on contributions received from May 2019 through March 2020 (for members that receive one vacation check per year) and on contributions received from November 2019 through March 2020 (for members who have elected to receive vacation benefits in two semi-annual installments).

Unemployment Compensation Benefits

The Families First Coronavirus Response Act (“FFCRA”), which was also recently enacted into law on the Federal level, increases unemployment compensation benefits by Six Hundred ($600) Dollars per week above and beyond what would otherwise be paid. That increase will be paid for up to four (4) months of unemployment or under employment.  In addition, unemployment compensation benefits will be paid for up to an additional 13 weeks above and beyond the 26 weeks currently offered in Pennsylvania.

The new law also makes certain part-time workers eligible for unemployment benefits. Finally, the "waiting week," for benefits has been eliminated and the work search requirement for employees unable to search because of COVID-19 illness or quarantine has been loosened.

Please note that the unemployment compensation office has been overwhelmed with claims, so you can expect some delay in getting through.  Once your application is completed, it will still likely take from 3 to 4 weeks before you receive your first check.

 

Fraternally yours,

Jim Snell                                                                                                      Kevin Heffernan

Business Manager                                                                                     Financial Secretary - Treasurer

RSS News Feed
Top News

News Archive

To see previous articles please click here .