If you are currently employed by the Plan's Sponsor, your Plan provisions may allow for the following three withdrawal options (these are not available in all Plans, please review the Summary Plan Description for details on your Plan's withdrawal options while still employed):


1) Loan Withdrawal:

Your Plan may permit Participants to borrow the lesser of $50,000 or 50% of their vested account balance (reduced by the highest outstanding loan balance, if any, in the previous 12-month rolling period) to be repaid over a period of no more than 5 years (30 years if purchasing your primary residence) in equal installments through payroll deductions from net wages (after-tax dollars). Under the CARES Act of March 2020, individuals affected by the Coronavirus may be eligible* to borrow the lesser of $100,000 of 100% of their vested account balance. Your Plan may permit you to have more than one active loan at a time. Unlike a loan from a bank, since you would be borrowing from your own retirement account, interest payments will be paid back into your retirement account. Please review the Summary Plan Description for details on the loan interest rate in your Plan. There is a one-time loan initiation fee of $175 plus the custodial institution's check transmittal fees which are deducted from your account balance (not your loan proceeds). There are no ongoing loan maintenance fees. Loan payments must be made in accordance with an amortization schedule which follows your payroll schedule. Participants are not allowed to voluntarily suspend loan payments unless Plan provisions allow for bona fide leave of absence suspension of payments or a Coronavirus* suspension of loan payments. No accelerated or additional payments will be accepted, but you may pay down the outstanding balance of your loan in one lump sum if you choose. If you default on your loan payments, the outstanding balance will be converted into taxable income for the year of the default. You will receive a Form 1099-R detailing the tax implications of your loan default. Processing times for a loan withdrawal range from 5 to 15 days upon receipt of a complete loan application and the subsequently-issued promissory note. You may continue to make contributions to your retirement account while making loan payments. 


* You are an eligible individual if you satisfy one of the following criteria: (1) You, your spouse, or a dependent (as defined in Code section 152) are 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. (2) You, your spouse, or a member of your household have/has experienced adverse financial consequences as a result of being quarantined; being furloughed or laid off; or having work hours, pay, or self-employment income reduced; had a job offer rescinded or a new job’s start date delayed due to such virus or disease; being unable to work due to lack of child care due to such virus or disease; closing or reducing hours of a business owned or operated by you due to such virus or disease; or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate). Note: a “member of the household” is someone who shares your principal residence. You may self-certify to your eligibility on the withdrawal form.


2) Withdrawal due to Financial Hardship:

Your Plan may permit Participants to take a hardship withdrawal due to an immediate and heavy financial need. Please review the Summary Plan Description for details. The withdrawal is limited to the amount necessary to satisfy that financial need, and the Participant must certify that the immediate and heavy financial need cannot be relieved from liquid assets or any other resources reasonably available to them. A financial need may be immediate and heavy even if it was reasonably foreseeable or voluntarily incurred by the Participant. A Participant is considered to have an immediate and heavy financial need if the withdrawal is for any of the following reasons: 

  • Medical care expenses for the Participant, their spouse, dependents or beneficiary.

  • Costs directly related to the purchase of a Participant’s principal residence (excluding mortgage payments).

  • Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the Participant or the Participant’s spouse, children, dependents or beneficiary.

  • Payments necessary to prevent the eviction of the Participant from their principal residence or foreclosure on the mortgage on that residence.

  • Funeral expenses for the Participant, their spouse, children, dependents, or beneficiary.

  • Certain expenses to repair damage to the Participant’s principal residence, even if that repair would not otherwise qualify for a casualty loss deduction.

  • Expenses incurred as a result of a federally-declared disaster, such as hurricanes and wildfires.

3) In-Service Withdrawal: 

Withdrawal of vested retirement assets may be permitted in your Plan from certain Sources/ Money Types at a certain age. Please review the Summary Plan Description for details. A mandatory 20% federal income tax withholding will apply for any direct distributions paid to you or to a taxable financial account held in your name (such as a checking or savings account, or a brokerage account). A 10% early withdrawal penalty may apply (but not withheld) depending on your age and other circumstances. You may avoid taxes and penalties by rolling over your in-service withdrawal to a Qualified Retirement Plan or IRA.


If you are no longer employed by the Plan's Sponsor, you may take a total distribution of your retirement account and have the proceeds paid directly to you or to a taxable financial account held in your name (such as a checking or savings account, or a brokerage account). The direct distribution option would incur taxes (20% federal tax withholding and state taxes where applicable) and a possible 10% early withdrawal penalty depending on your age and other circumstances. Rolling over your retirement assets from your Plan to another Qualified Retirement Plan or IRA may allow you to avoid taxes and penalties.


Coronavirus-Related Distributions: 

Your Plan may have elected to adopt the provisions of the March 2020 CARES Act to allow for Coronavirus-Related Distributions (CRD). Please check with your Plan Sponsor if CRDs are permitted in your Plan. CRDs must be completed by December 31, 2020 and are available to both active and former Employees. You are an eligible individual if you satisfy one of the following criteria: (1) You, your spouse, or a dependent (as defined in Code section 152) are 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. (2) You, your spouse, or a member of your household have/has experienced adverse financial consequences as a result of being quarantined; being furloughed or laid off; or having work hours, pay, or self-employment income reduced; had a job offer rescinded or a new job’s start date delayed due to such virus or disease; being unable to work due to lack of child care due to such virus or disease; closing or reducing hours of a business owned or operated by you due to such virus or disease; or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate). Note: a “member of the household” is someone who shares your principal residence. You may self-certify to your eligibility on the withdrawal form.


A $100,000 aggregate limit applies on CRDs taken during the 2020 tax year across all Plans and IRAs. The Participant may recognize the taxable income from the CRD over a three-year period that begins when they take the CRD. Please consult an accountant or tax professional for details. The Participant also has the ability to repay the CRD amount tax-free over the next three years and gain tax-free rollover treatment. Please consult an accountant or tax professional for details. Those repayments would not be subject to the Retirement Plan’s annual contribution limits. The repayment will be limited to the amount of the CRD but will not be required to be made to the Plan which issued the distribution. 


CRDs up to $100,000 are not subject to the 10% early-withdrawal penalty imposed by the IRS on withdrawals before reaching the age of 59.5. CRDs are subject to a 10% federal income tax withholding that is waivable by the Participant on the CRD form (using form W-4P). 


Please visit the Forms section of our website (http://forms.rpgconsultants.com) to download a PDF copy of any distribution or loan withdrawal forms for your Plan. Forms are also available in Spanish by clicking on the 3rd tab on the left-hand side of the Forms page. Please be sure to review the Special Tax Notice which details all tax implications for distributions/withdrawal options.