Expanded CARES Act Withdrawal Eligibility Criteria

As announced earlier this year, the Coronavirus Aid, Relief and Economic Security (CARES) Act created the opportunity for NRECA-sponsored 401(k) Pension Plan participants, who meet federal eligibility requirements, to take one special in-service withdrawal from their 401(k) account between June 1 and December 30, 2020.*

The Internal Revenue Service (IRS) has released IRS Notice 2020-50, which provides expanded participant eligibility criteria.

The initial guidance indicated the adverse consequences that would allow a participant to be eligible for the withdrawal were limited specifically to the plan participant. The subsequent guidance issued by the IRS indicates that a withdrawal can be taken if a participant or a participant’s spouse or member of the household (someone who shares the participant’s principal residence) experience adverse financial consequences.

NRECA’s CARES Act Distribution Attestation & Withdrawal Form has been updated to reflect the expanded eligibility criteria and must be completed by the participant and signed by the cooperative’s benefits administrator in order to initiate a withdrawal. By signing the form, the benefits administrator is not certifying that the participant meets eligibility criteria. However, the certification is not valid if there is actual knowledge to the contrary. There is no obligation to inquire into whether the individual has satisfied the conditions to be a qualified individual. The signature simply indicates that the form has been filled out accurately (i.e., correct marital status, the individual is one of their participants, etc.).

To provide your co-op’s employees with information about the expanded eligibility criteria, NRECA has prepared a template message for your use.

If you have additional questions about the withdrawal opportunity, please reach out to your co-op’s field representative. Or, you may reach out to the Member Contact Center at 866.673.2299.

*Note: If your co-op has previously opted out of offering the CARES Act withdrawal provision to your co-op’s employees, the expanded eligibility criteria do not apply.