Potential COVID-19 Financial Relief from your United 401(k) Plan Account
May 2, 2020
Congress passed new legislation to help ease some of the adverse financial impact of the COVID-19 crisis including the availability of new CARES Act loan and withdrawal options for your 401(k) Retirement Savings Account.
If you are experiencing financial challenges due to COVID-19, United has added the new CARES Act loan and withdrawal options from the 401(k) Plan.As you consider these 401(k) changes, we recommend that you consider your long-term savings goals and the potential impact a withdrawal or loan from your 401(k) may have.
The CARES Act may allow eligible participants in the United 401(k) plans to take a total distribution in 2020 of up to $100,000 from all of their retirement accounts without incurring the usual 10% penalty for early withdrawal.
As a result of the CARES Act, the most recent 401(k) loan relief available to eligible participants permits United to allow qualifying participants to suspend repayment of their 401(k) loans through December 31, 2020. The legislation also permits for an increase to the maximum loan amount under a new loan option for participants eligible to take out a new 401(k) loan.
To be eligible for the CARES Act 401(k) provisions, you must certify that you, your spouse or a dependent have been diagnosed with SARS-COV-2 or COVID-19, or you are experiencing adverse financial consequences as a result of a COVID-19-related event, including quarantine, a furlough, layoff, or reduced work schedule.
Regrettably, residents of Puerto Rico are not eligible for the CARES Act 401(k) provisions.
New CARES Act 401(k) loan repayment relief for existing loans
- Participants in the United 401(k) plans can request to suspend their loan repayment(s) through December 31, 2020.
- Your decision to suspend loan repayments will remain in effect through December 31, 2020.
- If your employment status changes during the period of your loan repayment suspension, the suspension of your loan repayments will still be in effect through December 31, 2020.
- During the suspension period, interest will continue to accrue on your loan. In January 2021, your loan will be re-amortized, your loan term will be extended by the duration of your suspension period, and your loan repayments will resume (your previous loan repayment amount will change after your loan is re-amortized).
For more information or to request to have your loan repayment deferred, contact your 401(k) provider.
New CARES Act 401(k) loan option
The CARES Act also allows for a new 401(k) loan option with a higher maximum loan amount.
- The limit on the CARES Act loan is the lesser of your vested account balance or $100,000. If you have a current loan, the total amount of the loan available to you will be reduced by your outstanding loan balance.
- You can’t have more than two outstanding loans at one time. If you already have two outstanding loans, you’ll need to pay off one loan in order to initiate the CARES Act loan.
- Contact your 401(k) provider to certify you meet the eligibility criteria to request a CARES Act loan.
If you have any questions, call the Fidelity Service Center for United Employees at 800-245-9034.Representatives are available from 7:30 a.m. to 11 p.m.