Annuity Fund – Profit-Sharing Hardship


The Board of Trustees have made temporary improvements to the Northeast Carpenters Annuity Plan (“Plan”) to allow you to obtain a special hardship distribution from your Profit-Sharing Sub-Account if you are experiencing hardships related to the virus SARS-CoV-2 or the coronavirus disease 2019 (“COVID-19”).

You are eligible to apply for these benefits if you submit a written certification to the Plan that you are experiencing a COVID-19 Hardship, which includes any of the following circumstances: (1) You or your spouse or dependent is diagnosed with COVID-19 (or SARS-COv-2); or (2)  you are experiencing financial hardship because you have been quarantined, laid off, or your work hours have been reduced  as a result of the COVID-19 outbreak, including your need to stay home due to lack of care for your children.

Because the Pandemic is causing substantial volatility and declines in the world financial markets, the Board has acted pursuant to section 2.03(a)(2) of the Plan to require the monthly calculation of the Plan’s cumulative investment loss, if any, during the 2020 Plan Year, and allocate that loss to the Annuity Plan Account balances of all participants. Thus, if you apply for the distribution of some or all of your Annuity Plan Account balance between the date of this SMM and December 31, 2020, for any of the reasons permitted by the Plan, your Account balance will reflect the most recent monthly calculation of the Plan’s cumulative investment loss.

Until June 30, 2020, you may obtain a special hardship distribution from your profit-sharing account in the Northeast Carpenters Annuity Plan if you certify to the Plan Administrator that you are experiencing a COVID-19 Hardship as described above. Your total COVID-19 distributions cannot exceed $20,000 and cannot cause your Profit-Sharing Sub-Account Balance to drop below $5,000.

If you qualify for and receive a special distribution as described above, you may repay some or all your distribution to the Annuity Fund in one or more payments within three years from when you received your distribution.  There are tax benefits to repayment (see below), but repayment is optional not mandatory.

The Fund cannot provide tax or legal advice to participants; therefore, you should not rely upon the following information when making decisions regarding whether to apply for a distribution and/or how it will impact your tax liability.  However, the Trustees are providing the following information to enable you to discuss tax matters with your individual tax advisor.

The special distributions described in this notice are subject to ordinary gross income tax and you will receive a Form 1099-R for the distribution at the beginning of the year following the year in which you took the distribution.

Tax Benefits that apply to a COVID-19 Hardship Distribution:

  • If you are under age 59 ½, the 10% early distribution penalty or excise tax that would normally apply to distributions from your Profit-Sharing Sub-Account will not apply to a COVID-19 Hardship Distribution.
  • The ordinary gross income tax liability incurred from this distribution can be paid over three years.
  • If you repay some or all of the distribution to the Plan within three years after you receive it, you can avoid/recover some or all of the gross income tax that would be due on the distribution.

Please talk to your tax advisor to determine if you qualify for any of this tax relief.