BAC Save Financial Hardship Relief Under The CARES Act
Amid the anxiousness surrounding COVID-19, there is some encouraging news for BAC members. The recently enacted CARES Act offers certain relief to participants of defined contribution plans that offer Financial Hardship Benefits like the BAC Save Annuity Plan. In light of this relief, the Plan now enables hardship withdrawals of up to $25,000 (up to $100,000 in the BAC Save 401(k) Plan) for participants meeting the requirements under the new law.
It is important to note that the Plan allows only two (2) withdrawals in a Calendar Plan Year (the average Hardship withdrawal in 2019 was $10,977). A revised Financial Hardship application—which has been updated for COVID-19 withdrawals and tax withholding changes—is available from the Fund Office as noted below.
The CARES Act does three things specifically with respect to the BAC Save Annuity Plan:
No. 1 — The CARES Act relaxes how participants must demonstrate their financial need in order to receive a COVID-19-related distribution. For a regular (non-COVID-19) hardship distribution, BAC Save Financial Hardship applicants must provide documents proving hardship, including foreclosure or eviction prevention, unreimbursed medical expenses, funeral-related expenses (spouse, parent, children or dependent) or other extraordinary financial hardship expenses permitted under the Plan.
Under the CARES Act, applicants may instead provide a self-certification along with a completed application that the withdrawal is due to a COVID-19 diagnosis of the applicants or dependents, or that they are experiencing financial consequences as a result of being quarantined, furloughed or laid off, or working reduced hours due to the pandemic. This is similar to the application process previously applied in cases of hurricanes, floods or other natural disasters.
No. 2 — The CARES Act waives the 10% early withdrawal tax penalty on COVID-19-related distributions.
No. 3 — The income tax on distributions can be spread over a three-year period. Participants can lessen or eliminate the income tax entirely if they repay the distributed amount within three (3) years. While we are currently awaiting IRS guidance on the repayment feature, please note that these changes do not apply to other types of hardship distributions.
Another thing the CARES Act does is waive Required Minimum Distributions (RMDs) for all participants who attained the age of 70 1/2 in 2019 and 2020, and RMDs otherwise payable in 2020.
The BAC Retirement Savings Plan (RSP) headed into the crisis with almost $190 million in assets. The RSP has always had a conservative investment allocation policy, which should serve to help shield the Plan from some of the losses in the broader equity markets. For 2019, the interest return that will be applied to participant accounts and will appear on upcoming 2019 Annual Statements is 14.43%.
Be assured that every effort is being made to ensure that service to members continue with as little disruption as possible during these challenging times.
How to Reach Us with Questions
BAC participants and applicants can continue to communicate with the Fund staff by phone at 888-880-8222 (press #4 for RSP). Calls will be routed to staff cell phones so that you can reach a live person as often as possible.
The RSP group emails also will be monitored with timely responses provided. Participants who have applied or want to apply for their BAC Save Annuity should email: RSPwithdrawalapplicantinfo@ipfweb.org