| Dear Valued Member, |
Here at Merck Employees Federal Credit Union we are taking a number of steps to ensure members are served during these difficult times. We also want to ensure that you are aware of any important legislative changes enacted in the wake of the coronavirus pandemic that could impact your accounts. There have been significant changes related to Individual Retirement Accounts that allow for more flexibility for those IRA account holders who may have been negatively impacted.
The law temporarily loosens the rules on hardship distributions from IRAs and other retirement accounts, giving people affected by the crisis access of up to $100,000 of their retirement savings without the usual 10% penalty. If you take advantage of this provision, you do have to repay the money back to your account within three years. There will be no interest charged or penalties if it is paid back within three years.
The CARES Act also suspends for 2020 the required minimum distributions (RMDs) the government requires most people to take from tax-deferred 401(k)s and individual retirement accounts (IRAs) starting at either age 70.5 or age 72.
An RMD is calculated for each account by dividing the prior Dec. 31 balance of that IRA or retirement plan account by a life expectancy factor. Because the markets have changed dramatically since December 31, 2019, skipping one year can help a retiree recuperate and minimize tax impacts for 2020.
If you currently take an RMD from your Merck Employees FCU IRA that you would like to stop for 2020, please click here to complete the necessary forms to have your RMD stopped for 2020. If you are interested in taking a withdrawal of an existing IRA due to hardship, please contact the credit union at 732-594-3317. For a thorough description of the changes stemming from The Cares Act please click here.