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Had an exchange with an employee today - a client's CPA referred to a client's "Keogh" plan. Our administrator didn't know what that term meant.

Fair enough. Our Relius loan policy says "Generally, the Administrator will require that the Participant repay the loan by agreeing to payroll deduction." I do think the OP is describing a "qualified individual" as a participant who has been furloughed/laid off. Presumably they are suffering adverse financial consequences and could represent as much to the plan administrator. Even with stricter language in the loan policy, I think there's a reasonable argument to be made that repayment still must (and can) be accomplished by means of payroll deduction. The fact that they don't have any payroll currently does not mean they will not have any payroll a year later when the first payment is due. In other words, it's not impossible to comply with the loan policy at the time repayments are actually required. Either way, I suppose there's no harm in amending the policy to address specifically.

More direct: No. It's not a FRINGE. It's actual PAY. This might help (and here's the link to IRS Pub 15-B): https://www.irs.gov/pub/irs-pdf/p15b.pdf Understanding Fringe Benefits Common fringe benefits include health insurance, life insurance, tuition assistance, childcare reimbursement, cafeteria subsidies, below-market loans, employee discounts, employee stock options, and personal use of a company-owned vehicle. [Important: The companies that compete for the best talent in highly competitive fields may offer the most extraordinary fringe benefits.] Uncommon fringe benefits may fit the company profile. PetSmart And Dogtopia both operate pet-friendly workplaces. Ben&Jerry's rewards its workers with free ice cream. Patagonia's headquarters features extensive volleyball courts and yoga classes. The companies that compete for the best talent in highly competitive fields may offer the most extraordinary fringe benefits. Alphabet, the parent company of Google, is known for benefits that include free commuter bus service and a free gourmet cafeteria. Microsoft gives 20 weeks of paid time off to new birth mothers and 12 weeks for other new parents. Special Considerations By default, fringe benefits are taxable unless they are specifically exempted. Recipients of taxable fringe benefits are required to include the fair market value of the benefit in their taxable income for the year. The Internal Revenue Service (IRS) maintains a list called the Tax Guide to Fringe Benefits. As of 2019, the list of fringe benefits excluded from income taxes includes: Accident and health benefits Achievement awards Adoption assistance Athletic facilities Commuting benefits De minimis (minimal) benefits Dependent care assistance Educational assistance Employee discounts Employee stock options Employer-provided cell phones Group-term life insurance coverage Health savings accounts (HSA) Lodgings on business premises Meals No-additional-cost services Retirement planning services Tuition reduction Working conditions benefits All of these exemptions are subject to certain conditions, many of them complex. For example, achievement awards are only exempt up to a value of $1,600 for qualified plan awards and a value of $400 for non-qualified plan awards. Qualified plan awards are open to all employees, not just highly-paid employees. Other exemptions are not available to highly compensated employees if the benefits are given to them but not rank-and-file employees. These include employee discounts, adoption assistance, and dependent care assistance. Most but not all fringe benefits that are income tax-exempt are also exempt from Social Security, Medicare, and federal unemployment taxes. Adoption assistance is exempt from income tax only. Valuing Fringe Benefits Any fringe benefit not named above, or any of the benefits named above which does not conform to IRS rules for exemption, is taxable. Those rules are complex too. For example, working condition benefits are taxable to the extent that they are for personal use. For example, if an employee is given a laptop, the taxable income would be the percentage of the laptop's fair market value that is devoted to personal use. If 80% of its use is personal, the taxable income is 80% of the value of the computer. In general, fringe benefits are valued at fair market value. This is the amount the employee would pay for the same benefit at retail. (For related reading, see "What are Some Examples of Common Fringe Benefits?")

Of course we will be looking for guidance, but paid leave will show as compensation on the W-2 and if that's the definition used for plan purposes (without any modifications), then the leave counts. Also, be aware that hours will also probably count during the leave since the definition of hours includes hours for which you are paid or entitled to payment, but it is also customarily limited to no more than 500 hours for any period of time when no services are paid. Document language will almost definitely spell out those provisions.

That section starts: "In the case of a qualified individual with an outstanding loan (on or after the date of the enactment of this Act)..." suggesting that even new loans (i.e., those not outstanding "on" the date of enactment, but outstanding "after" the date of enactment) would be covered as well. Deferring payments on new loans would also seem to further the goal of letting participants access the funds now (when needed) as opposed to solely providing relief for pre-existing loans.

If I'm reading it correctly, the CARES Act working its way through Congress now would defer loan payments for a year, possibly avoiding the issue altogether.

This seems to be the bill as passed by the Senate: https://assets.documentcloud.org/documents/6819239/FINAL-FINAL-CARES-ACT.pdf#page=157 Of course, the House still needs to act, which is scheduled for Friday. The official full text will appear here (hopefully later today): https://www.congress.gov/bill/116th-congress/house-bill/748

I have not considered this question, and have not read the relevant law. But: Absent a provision of applicable law or in the plan’s governing document, perhaps a plan’s administrator should apply or interpret a plan’s definition of compensation so that pay for a leave required under the Families First Coronavirus Response Act is compensation to the same extent that pay for a somewhat similar leave not required under that Act is compensation. An administrator might be reluctant to treat a payment of wages as a fringe benefit within the meaning of the plan’s compensation definition if the benefit is not of a kind described in Internal Revenue Code of 1986 § 132 or some analogous fringe benefit.

Umm, am I missing something? I thought if the plan had a safe harbor match that satisfied the ADP and ACP, it is exempt from the top heavy rules.

Thank you all, especially ratherbereading for getting the actual legislative text and ratherbegolfing for providing the summary.