CARES Act and 403(b) Retirement Savings Plans

The new federal Coronavirus Aid, Relief, and Economic Security (“CARES) Act provides opportunities for individuals and families whose finances were adversely impacted by COVID-19 to take distributions and loans from their retirement savings plan balances.

An “eligible participant” is a plan participant who has experienced adverse financial consequences due to COVID-19 as defined in the CARES Act: The Act defines an eligible participant as follows:

  1.  The participant is diagnosed with COVID-19, or
  2.  a spouse or dependent is diagnosed with COVID-19, or
  3.  the participant experiences adverse financial consequences due to quarantine, furlough, lay off, or having work hours reduced due to the virus; being unable to work due to lack of child care due to the virus; or closing or reducing hours of a business owned or operated by the individual due to the virus, or
  4.  other factors as determined by the Secretary of Treasury.

Taking an early distribution or loan from your retirement plan has significant long-term implications for your retirement savings. While these options are available for those who may need them, you should carefully consider the long-term ramifications before doing so.

The following options will be available to eligible participants in any of Yale’s 403(b) plans*. 

CARES Act Distributions

Eligible participants can request a CARES Act distribution of up to $100,000 total from their employee and employer balances, subject to contract restrictions. CARES Act distributions are more favorable than hardship distributions because the federal 10% early-distribution penalty tax (generally applicable if participants are under age 59 ½) is waived, and the federal income tax can be spread over a three-year period. Participants who want to continue to defer tax on the distribution can repay the distributed amounts to their plan account or an IRA within three years. The CARES Act distribution will only be available through December 31, 2020.

Plan Loan Provisions

The maximum amount an eligible participant can take in plan loans has increased for loans taken through September 23, 2020. During this time period, the maximum amount an eligible participant can take in loans is the lesser of $100,000 or the amount of their vested plan account balance. Loan repayments due in 2020 may be delayed by one year following the date of the loan.

Eligible participants with a current outstanding loan can defer payments due between March 27 and December 31, 2020 for up to one year. Future loan repayments will be adjusted for interest during the deferral period.

Required Minimum Distributions

Required minimum distributions due in 2020 are not required to be taken.

Important Note: Spousal waiver requirements, the limit on the number of loans participants may take, other loan limitations, and contract restrictions remain in effect.

You should consider all of your options before taking a loan or withdrawal from your retirement savings plan as these can have a long-term negative impact on your future financial security. Additional information is available on the TIAA website or by calling TIAA at 855-250-5424. You may also schedule a phone appointment with a TIAA advisor by calling 800-732-8353.

This notice constitutes summaries of material modifications (“SMMs”) to the Plans. Please keep a copy of this notice with your copy of the summary plan descriptions (“SPDs”) for the Plans. Please contact Employee Services at or by calling 203-432-5552 if you would like a copy of this SMM or an SPD sent to you free of charge. 

*These options will be available to eligible participants in the Yale University Retirement Account Plan (YURAP), the Yale University Matching Retirement Plan, and the Yale University Tax-Deferred 403(b) Savings Plan (“Plans”). The plan documents will be amended to provide for these options.