After the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27, the Federal Retirement Thrift Investment Board (FRTIB) created a CARES Act project that included four key provisions to enable Thrift Savings Plan (TSP) participants and beneficiaries to respond to financial management needs during the pandemic.
Those four provisions were: changes in 2020 required minimum distributions (RMDs), loan payment suspensions, an increase in the maximum loan amount to $100,000 and CARES Act withdrawal provisions.
The TSP reported that, among the more than 6 million TSP participants, there were only 3,797 CARES Act withdrawals. The average withdrawal was $26,270. The total amount of CARES Act withdrawals came to nearly $100 million.
There were 787 CARES Act loans greater than $50,000. CARES Act loans averaged $74,402 and totaled $58.6 million.
As to how this compares with CARES Act withdrawals and loans from 401(k) plans, Fidelity reported that, as of June 30, 711,000 individuals had taken a CARES Act distribution from their retirement account. This represents 3% of eligible employees on Fidelity’s workplace savings platform. The overall average withdrawal amount was $12,100, while the median withdrawal amount was $4,800.
Among T. Rowe Price’s large plan market, which it defines as plan with more than $25 million in assets, only 4.2% of participants who have access to coronavirus-related distributions (CRDs) have taken a withdrawal, and fewer than 1% have taken out a COVID-19-related loan.
Among Alight Solutions’ participants, there have been approximately 140,000 withdrawals, representing 4% of the eligible population. Interestingly, 51% of these people elected the maximum amount: either $100,000 or 100% of available funds.