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  • Update on CARES Act temporary loan and withdrawal options

    The CARES Act allows us to offer temporary loan and withdrawal options to TSP participants affected by COVID-19. Today we are announcing that the loan options described below will be available no later than June 22, 2020, and that the withdrawal option described here will be available in mid-July 2020. Both the loan and withdrawal options are available to you only if you can certify that you meet one or more of the following criteria:

    • You have been 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.
    • Your spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) has been diagnosed with such virus or disease by such a test.
    • You are experiencing adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced 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 the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate).

    Increased maximum loan amount
    The maximum loan amount is increased from $50,000 to $100,000, and the portion of your available balance you can borrow is raised from 50% to 100%. The deadline for applying for a loan with this increased maximum will be in September 2020. We will announce the exact cutoff date soon.

    Temporary suspension of loan payments
    You may suspend your obligation to make payments on your TSP loan or loans for 12 months, which will also extend the term of your loan by 12 months. This applies to existing loans and loans taken in the remainder of 2020. We will make a new form available for you to request this suspension. You have until December 31, 2020, to have your payments suspended.

    CARES Act Withdrawal
    You may make a one-time withdrawal of up to $100,000 from a civilian or uniformed services account. For those still in federal service, the usual requirements that you be at least 59 ½ years old or certify that you meet specific financial hardship criteria are waived. Though you may request that we withhold money from your withdrawal for federal income tax, we will not automatically do that. This withdrawal will be eligible for the favorable tax treatment described here, with all of the same options and restrictions. The deadline for applying for this withdrawal will be in December 2020. We will announce the exact cutoff date soon.

  • Withdrawals for Participants Affected by COVID-19

    The CARES Act creates special rules for most types of TSP withdrawals made by participants affected by COVID-19. We’re working on a new, temporary withdrawal option that waives the usual in-service withdrawal requirements and allows all COVID-affected participants to waive tax withholding. We will provide details about that soon. But many TSP participants who are affected by COVID-19 can take advantage of the withdrawal provisions of the CARES ACT using withdrawal types for which they’re already eligible. If you’re a current civilian federal employee or member of the uniformed services and eligible under the existing rules, such withdrawals include hardship withdrawals and age-based in-service “59½” withdrawals. If you’re separated from federal service or a beneficiary participant, they include single payments and some installment payments. This article explains the favorable tax treatment that you may be eligible for right now without waiting for the new withdrawal option to be available.

    Definitions and Eligibility

    This article uses the terms coronavirus-related distribution and qualified individual.

    A coronavirus-related distribution, as defined by the Internal Revenue Service (IRS), is “a distribution (withdrawal) that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $100,000 from all plans and IRAs.” That means $100,000 is the maximum amount across all your retirement plans combined that you can apply these tax advantages to.

    You’re a qualified individual if you meet at least one of the following criteria listed in the CARES Act:

    • You have been 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.
    • Your spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) has been diagnosed with such virus or disease by such a test.
    • You are experiencing adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced 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 the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate).

    You must be a qualified individual receiving a coronavirus-related distribution to take advantage of the favorable tax treatment described below. You must also designate your withdrawal(s) as a coronavirus-related distribution when you file your taxes. To do that, you’ll file Form 8915-E, which the IRS is expected to make available before the end of 2020.

    Early Withdrawal Penalty Waived

    If you designate your withdrawal(s) as a coronavirus-related distribution when you file your taxes, the IRS will waive the 10% additional tax on early distributions.

    When You Must Pay Tax on the Income from Your Withdrawal

    The taxable income from withdrawals made by qualified individuals may be spread “ratably” over a three-year period, starting with the year in which you receive your distribution. For example, if you receive a $9,000 coronavirus-related distribution in 2020, you could report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. This is optional; you can also choose to include all of the income in the year of the withdrawal.

    Repaying Withdrawals

    If you are a qualified individual, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that you received the distribution. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct plan-to-plan transfer so that you do not owe federal income tax on the distribution. The law allows you to repay coronavirus-related distributions to the plan from which you received it or to another eligible retirement plan.

  • Rollover Period Extended to July 15

    If you received any withdrawal between February 1 and May 15 that is eligible for rollover, then the IRS has extended your 60-day rollover deadline to July 15th. If you received an RMD (or an installment payment that included an RMD) between February 1 and May 15, then you can roll those amounts over—to an IRA or eligible employer plan or back into your TSP account—provided that you do so by July 15th. Use Form TSP‑60.

  • Update on CARES Act temporary loan and withdrawal options

    The CARES Act allows us to offer temporary loan and withdrawal options to TSP participants affected by COVID-19. We are working as quickly as possible to add these options to our system so you can count on efficient processing of these requests. You can check this webpage for updates about these options and when they will be available to you. We will post the next update by May 15, 2020.