A Message from Human Resources: COVID-19 and Your 401(k)
DeBock, Paul
For many people, the COVID-19 pandemic is straining both their physical and financial health. Don’t forget that the COVID-19 Estes Employee Support Program features 0% interest hardship loans and a Quarantine Assistance Fund for qualified employees, which can help during these challenging times. For details, see your manager or contact the Employee Support Line at 866-808-9321 or Bene...@estes-express.com.
What’s more, recent federal legislation addresses greater access to certain retirement account funds. If you have an Estes 401(k) plan through Vanguard, the following are the key changes we’re now allowing if you’re affected by COVID-19:
· Special 401(k) account withdrawals up to $100,000
· 401(k) loan payments suspended for up to one year
· 401(k) loan limits doubled to up to $100,000 — or 100% of the vested account balance — whichever is less
These new rules can deliver the financial help you need. For questions, or if you’d like to get started, contact Vanguard Participant Services at 800-523-1188 Monday through Friday from 8:30 a.m. to 9 p.m. Eastern time. Be sure to have your plan number available:
Estes: 097386
Estes West: 097387
401(k) Loans and Withdrawals Details
Coronavirus-related Withdrawals Available
Special withdrawals will be permitted for those affected by the coronavirus. This includes anyone who contracted COVID-19, whose spouse or dependents contracted it, or who lost their job or income because of the quarantine.* Call Vanguard to request this withdrawal. (NOTE: You do not need to prove you’ve been impacted when requesting the withdrawal, but you may be required to provide proof later.)
If you are affected, you may be eligible to take out up to $100,000 from your Estes 401(k). The 10% federal penalty tax, which typically applies to withdrawals by plan participants younger than age 59½, is waived.
This type of withdrawal is not subject to a mandatory 20% withholding for taxes. Instead, 10% will be automatically withheld. If you want, you can waive this withholding entirely. The taxes you’d owe can be paid pro-rata over a three-year period. In addition, you may repay the amount of the distribution as a rollover within three years.
Relief from Paying Back Loans
If you have a 401(k) loan, you can call Vanguard if you want to suspend your loan repayment for up to a year. Vanguard will NOT automatically delay loan repayments without a direct request from the participant.
Following the suspension period, the loan will be re-amortized to include interest accrued during the suspension, and the total repayment term of the loan may be extended by the duration of the suspension (e.g. up to one year).
Plan Loan Limits Doubled
Loan limits for qualified plans have increased to double the previous amount that can be borrowed, up to $100,000 or 100% of the vested account balance, whichever is less. This is available until September 23, 2020. To be eligible, you must be affected by the coronavirus. This includes anyone who either contracted COVID-19, whose spouse or dependents contracted it, or who lost their job or income because of the quarantine.* Call Vanguard to request a loan. Please note loans must still be repaid within five years so please consider that the higher loan amount could result in higher repayments.
Required Minimum Distributions (RMDs) Waived for 2020
No one is required to take an RMD from a retirement plan or an IRA in 2020. This change affects anyone who turned age 70½ in 2019 or earlier and would have been required to take an RMD.
o If you’ve been receiving RMDs and were scheduled for one in 2020, you will still receive it unless you call Vanguard to suspend it. NOTE: If you receive payments throughout the year and choose to suspend your 2020 RMD, payments will be suspended for the rest of the year.
o If you already received an RMD in 2020, call Vanguard to discuss your options.
o If you haven’t received your 2020 RMD yet and this is your first time receiving one, Vanguard will suspend this year’s payment. Call Vanguard if you need to discuss options to access your money.
Please refer to Vanguard for specific rules and Plan requirements.
*A coronavirus-related distribution is a 2020 distribution to an individual (1) diagnosed with COVID-19 by a CDC-approved test, (2) whose spouse or dependent was diagnosed by a CDC-approved test, or (3) who experiences adverse financial consequences due to quarantine; layoff, furlough or reduced hours; inability to work because of lack of child care; closure or reduced hours of a business owned by the individual due to the virus; or other reasons identified by Treasury. Plan administrators can rely on participant self-certification of eligibility for these distributions. At a later date, you may be required to offer proof that you were impacted.
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