Coronavirus (COVID-19)-Related Distributions & Eligibility for Unemployment Insurance

May 4, 2020

Some questions have arisen regarding whether taking a COVID-19-related distribution from the Annuity Fund per the special rules of the CARES Act can affect one’s ability to receive unemployment benefits. In response to this inquiry, the Fund Office has put together the following Frequently Asked Questions (“FAQs”).

Is it possible that I may be ineligible for Unemployment Insurance if I receive a Coronavirus-Related Distribution?

On April 28, 2020, the United States Department of Labor (“USDOL”) issued “COVID-19 FAQS for Participants and Beneficiaries.” These FAQs are available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/covid-19.pdf and are also posted on the Benefit Funds’ website at https://nyccbf.com/department-of-labor-dol-issues-covid-19-faqs-for-employee-benefit-plan-participants-and-beneficiaries/. The USDOL’s FAQS discussed several downsides to receiving a Coronavirus-Related Distribution, including the potential impact of receiving a Coronavirus-Related Distribution on eligibility to receive unemployment insurance. The USDOL FAQ stated: “Because a pre-retirement distribution may be considered ‘income,’ it could affect your eligibility to receive unemployment compensation. Each state sets its own unemployment insurance benefits eligibility guidelines; therefore, you should review your state’s latest updates on Unemployment Insurance changes related to COVID-19 before you act.” In addition, you may also wish to check with your tax and/or financial advisor about the impact of taking a Coronavirus-Related Distribution.

What information is available on the New York State website regarding retirement plan distributions and Unemployment Insurance?

Please visit New York State’s website at https://labor.ny.gov/ui/claimantinfo/dismissal-severance-pensions-faq.shtm#0 for information on pensions and unemployment. The information on New York State’s website as of the date of this updated FAQ states that your unemployment benefit rate could be reduced if you receive a lump sum payment from an annuity fund. However, we have heard that the New York State Department of Labor (“NYSDOL”) has responded to some inquiries on this topic by advising that annuity withdrawals on account of hardship will not affect a claimant’s eligibility for unemployment insurance. We will continue to check the NYSDOL website to see if this position is formally announced and will provide updates if available. We cannot make any predictions regarding how the NYSDOL will ultimately treat this issue in the absence of formal guidance from the NYSDOL.

Where can I get information on New Jersey’s rules regarding retirement plan distributions and Unemployment Insurance?

Please visit New Jersey’s website at https://myunemployment.nj.gov/help/faqs/reducebenefits.shtml for information on pensions and unemployment.

To view all FAQs concerning the special rules of the CARES Act and how they relate to the NYCDCC Annuity Fund, please click HERE.