Some of the frequently asked questions that we have received regarding the COVID-19 outbreak include:
- Pension Payments Will Be Paid On Time
MERS continues to remain operational and will process pension payments on time.
- Help Us Help You by Using myMERS
We are asking participants to use their myMERS account as the primary method of conducting business with MERS at this time. Using this secure online method will help ensure transactions are processed efficiently while teams are working remotely. As an alternative, you can fax us forms at 517.703.9706.Please note that any paperwork that is sent via U.S. mail may experience processing delays.
- If you have an urgent request, the MERS Service Center remains open and available to assist you Monday through Friday from 8:30 a.m. to 5:00 p.m. by calling 800.767.MERS (6377). The Service Center is also available to help you walk through any of our online processes.
- MERS Office Building is Closed
The MERS office building is currently closed. However, MERS staff is still hard at work and you can continue to reach us:
- The MERS Service Center remains open and available to assist you Monday through Friday from 8:30 a.m. to 5:00 p.m. by calling 800.767.MERS (6377)
- You can log in to myMERS to review your account and perform many transactions
- We’re Postponing MERS-Hosted Events
All MERS-hosted events, such as Pizza & Planning, will be postponed until further notice. If you have registered to attend an upcoming event, we will contact you directly with links to related online webinars and videos as an immediate alternative.
As new developments emerge, we will share information with you about how we continue to operate safely and effectively. Thank you for your support as we work to keep our communities safe.
Click to view the MERS COVID-19 Preparedness and Response Plan.
On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This aid package provides financial aid to families and businesses impacted by the COVID-19 pandemic.
There are a few changes that may affect your retirement benefit(s):
- New option for “Coronavirus-Related Distribution” for qualified individuals
Applies to: Defined Contribution Plan, 457 Program, IRA
- Temporarily loosens criteria for plan loans for qualified individuations
Applies to: Defined Contribution Plan, 457 Program, IRA
- Provides a suspension of required minimum distributions for 2020 for all participants eligible for RMDs, regardless if considered a qualified individual or not. The RMD suspension also applies to 2019 RMDs that were due by April 1, 2020 for individuals who turned age 70½ last year, unless those payments were made in 2019.
Applies to: Defined Contribution Plan, 457 Program, IRA
A Qualified Individual is defined as anyone who meets one of the following criteria between January 1, 2020 and December 31, 2020:
- I was diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (referred to collectively as COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act);
- My spouse or my dependent was diagnosed with COVID-19 by test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
- I have experienced adverse financial consequences because:
I, my spouse, or a member of my household was quarantined, furloughed or laid off, or had work hours reduced due to COVID-19;
I, my spouse, or a member of my household was unable to work due to lack of childcare due to COVID-19;
A business owned or operated by me, my spouse, or a member of my household closed or reduced hours due to COVID-19; or
I, my spouse, or a member of my household had a reduction in pay (or self-employment income) due to COVID-19 or had a job offer rescinded or start date for a job delayed due to COVID-19.
Qualified individuals may take a plan distribution from their MERS Defined Contribution Plan, MERS 457 Program or MERS IRA with the following guidelines:
- Eligibility: For Defined Contribution, if you are an active employee of the MERS provider, you must be at least 59½ (does not apply if no longer working for that employer). For IRA or 457, there are no age or employment status restrictions.
- Amount: The distribution cannot exceed $100,000 total between all of your plans.
- Timeframe: The distribution must occur in 2020.
- Proof: You can self-certify that you are a qualified individual. Your employer does not need to obtain written evidence other than the certification.
- Tax Consequences: MERS is required to withhold 10% for income tax. However, the 10% penalty tax under IRC 72(t) is waived. The distribution will be taxable pro rata over three years beginning with the year of distribution. In the alternative, you can elect at the time of filing your 2020 tax return to have the entire amount taxed in the year of distribution.
- Withholding: The distribution is exempt from the mandatory 20% withholding.
- Repayment: You may repay some or all of the distribution in one or more installments over a three year period beginning at the time of distribution. Repayment may be to an IRA or employer plan. Repaid amounts are treated as if they were an eligible rollover distribution therefore excluding the amount from taxation.
|Coronavirus-related Distribution||Emergency Distribution||Loan|
|Applicable programs||Defined Contribution, 457 Program, IRA||457 Program||Defined Contribution, 457 Program (if your employer allows for loans)|
|Available for||Qualified Individuals (see definition above)||Individuals experiencing a severe financial hardship resulting from an illness, accident, loss of property due to casualty, or other similar loss beyond the control of the participant, or related to their spouse, dependent or primary beneficiary||Any active employee|
|Maximum Amount Allowed||The lesser of $100,000 or your vested account balance
|Any amount||50% of your vested account balance, up to $50,000
The minimum loan amount is $1,000
For Qualified Individuals as defined in the CARES Act, 100% of vested balance, up to $100,000 whichever is less
|Age Requirement||At least 59 ½ if you are actively employed and enrolled in a defined contribution plan
No age requirement if you are have a MERS Defined Contribution plan or 457 Program but are no longer employed with the employer that provided these benefits
No age requirement if you participate in the MERS IRA
No age requirement if you active in a MERS 457
|No age requirement||No age requirement|
|Tax Implication||Subject to 10% federal withholding (unless you opt out), and treated as income spread over three years (2020, 2021 and 2022), or in the year you receive it if you so choose.||Subject to 10% federal withholding (unless you opt out), and treated as income in the year you receive it.||No taxes are withheld or due when a loan is received|
|Employer Approval Required?||No||Yes||Yes|
|Repayment required?||No, but permitted if within 3 years||No||Yes|
Qualified individuals may take out a loan from their MERS Defined Contribution Plan or MERS 457 Program with the following guidelines:
- Amount: Loans may be made up to $100,000 and may be 100% of the account value.
- Timeframe: These rules are in place for 180 days following the Act’s passage (September 22, 2020).
Qualified participants with loan payments owed between now and December 31, 2020, may delay the payment for up to one year from the original due date. Loans must be re-amortized after the delay to cover unpaid interest and missed payments. The period of delay may be disregarded when applying the five year limitation on amortizations. However, you will need to begin loan payments if otherwise required after January 1, 2021.
Example: Bob obtained a loan in July 2019, with monthly payments. Bob’s employer lays him off due to the coronavirus pandemic and so Bob meets the criteria of a “Qualified Individual.” Bob stops payment as of April 1, 2020. Bob submits a Loan Repayment Suspension Application and request to delay his payments if he expects to return to work this year, or to request a delay repaying the remaining balance of the loan and avoid a loan default. This application allows for:
- If Bob returns to work before end of year, let’s say September, his submission to suspend repayment means his loan will begin repayments with his September, 2020 return to work and withholding of regular loan repayments will begin again, plus interest and a revised amortization schedule. His missed payments will be factored into the regular repayment and a re-amortized schedule upon resuming those regular loan payments. There is no penalty for his suspended repayments.
- If Bob does not return to the same employer and expects to repay his loan in full to avoid defaulting, submitting this application allows Bob to avoid default and pay the full remaining amount of the loan one year from its due date – April 1, 2021. This avoids defaulting on the loan which would result in a taxable distribution and subjected to applicable taxes for 2020.
This portion of the CARES Act states that those who are required to take required minimum distributions (RMDs) are not obligated to do so for 2020. This includes 2019 RMDs which normally would be due by April 1, 2020.
Note: Because MERS’ recordkeeper, Alerus, had processed 2019 distributions after January 1, 2020, but before the CARES Act was passed, you can roll the distribution amount within 60 days to an employer plan or IRA. Doing so will offset the taxable distribution.
As a part of the CARES Act, over-the-counter (OTC) drugs, including menstrual products, are now deemed an eligible expense when using your MERS Health Care Savings Program (HCSP) account.
This change is effective for expenses incurred on or after January 1, 2020. If you previously submitted a claim for an OTC item you purchased since that time and was denied, you can resubmit the claim online through the Claims Management portal in myMERS or via the mobile app. You are able to use your Health Benefits debit card to cover these OTC expenses.
Some vendors may not have their coding updated to comply with this regulatory change, if you find your transaction is declined, please purchase the item using an alternative method and submit your receipt for reimbursement.
In order to receive a CRD, you must self-certify that you are a “qualified individual” – someone who has, or whose spouse has COVID 19 or someone who has suffered specific economic hardships as a result of the pandemic. You do not have to submit any documentation regarding your status as a qualified individual – it is based on your certification (although it is wise to retain all records on that in case you are audited by the IRS). The amount of a CRD is limited to $100,000, but there is no requirement to demonstrate the amount you need or whether you are able to get the amount you need from other sources. You may repay a CRD over three years, and you are able to spread the income tax owed on what you don’t repay over three years. CRDs from the MERS Defined Contribution Plan are not subject to the 10% early withdrawal penalty (if it was applicable to you). Employers are not required to sign off on CRDs. You can request a CRDs from either the MERS DC Plan or MERS 457 Plan while still working. However, if you would like to request a CRD from your MERS DC Plan, and are still working, you must be at least age 59 ½.
Unforeseeable emergency distributions from the MERS 457 Plan are limited to specific events that must be proven with detailed documentation. The amount is limited to the amount needed for the specific event (for which you must provide detailed documentation), and you must also document that you don’t have other assets from which you can get that amount. You cannot repay an unforeseeable emergency distribution, all taxes are due in the year it is taken, and the employer must approve under current procedures.
If you would like to request a delay on loan repayments that are due between March 27 and December 31, 2020, and you are considered a qualified individual, please complete the Loan Repayment Application for Qualified Individuals, sign and obtain employer approval. Employers are required to sign off on the repayment due to the need to adjust payroll withholding accordingly. Payments due between March 27 and December 31, 2020 can be delayed for up to one year. Interest continues to accrue on the loan, and payments due after December 31, 2020 will be due on the regular due dates. Your loan payments will be recalculated to account for the delayed payments.
There are some options available if you have an outstanding loan and, due to job loss, may be required to repay the remaining amount due in full immediately, as required by the terms of the loan. MERS cannot advise you on this and we encourage consultation with a tax professional.
These options include:
- If you do not repay the outstanding amount in full immediately, default occurs and the outstanding amount is considered a distribution. If that occurs before December 31, 2020, and you are a qualified individual as defined by the CARES Act, you may be able to claim the amount of that distribution as a coronavirus-related-distribution (CRD), in which case the terms of a CRD described above would apply (ability to repay, and applicable taxes due over a three-year period).
- If you are a qualified individual you can use the Loan Repayment Application for Qualified Individuals to request a delay in paying the immediately due repayment. Doing so means that the outstanding balance (with interest continuing to accrue) would be due no later than one year from the date of termination. If, by then, the outstanding balance is not paid in full (including the interest that continued to accrue), the loan will default and the unpaid amount will be considered a distribution. You will owe the 10% early distribution penalty (if applicable), all the taxes will be due with 2021 return, and the option to rollover or repay it will not be available.
Because CRDs cannot be rolled over to other plans or to IRAs, the mandatory 20% federal tax withholding does not apply to them. The 10% penalty for early distribution is waived when MERS Plan eligiblity is met. Regular 10% income tax withholding applicable to retirement plan distributions will apply, unless you elect out of withholding. If you wish to have additional federal income tax withheld, you may indicate that on the application. Note – federal income tax will still be due, but can be reconciled as part of future income tax return fillings.
In general, yes, 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 the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.
If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. See sections 4.D, 4.E, and 4.F of Notice 2005-92 for additional examples.
The distributions generally are included in income 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 would report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. However, you have the option of including the entire distribution in your income for the year of the distribution.
A coronavirus-related distribution should be reported on your individual federal income tax return for 2020. You must include the taxable portion of the distribution in income ratably over the 3-year period – 2020, 2021, and 2022 – unless you elect to include the entire amount in income in 2020. Whether or not you are required to file a federal income tax return, you would use Form 8915-E (which is expected to be available before the end of 2020) to report any repayment of a coronavirus-related distribution and to determine the amount of any coronavirus-related distribution includible in income for a year.
In other words, taxes have to be either paid all in 2020, or it has to be spread evenly over three years – 2020, 2021 and 2022. There are no other options.