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It's possible and likely. You wouldn't "lose" your pension but your payments would stop because you wouldn't be considered retired. They would resume when you again retired. Retirement meaning you are not working in any covered employment as defined by your union/plan.

Agree with Bird. If my pay is adjusted for the reduction and my reduced pay is now my pay, fine, but if I'm funding my own SH through an actual payroll withholding, I think that is a huge issue. And the math doesn't work either as you note.

Hello Everyone, I heard from the Department of Labor: the box for collectively-bargained plan is to be checked.

There is nothing in the Act that limits distribution to the amount of any "need." If you are a "qualified individual" you get what you can get from your account - subject to plan limits. We do have some clients that have implemented limits of less than $100k - specifically as a result of the type of situation you refer to.

I don't disagree with what you are saying, but I think it is a big "if" they are doing it as described. I think it boils down to the employment agreement and how it defines compensation. If it is unclear, the fact that the poster agreed to it might indicate that it is ok but that's above my pay grade. Also interesting that $500 X 26 = $13,000. More than 3% of maximum comp. Curious Employee, what are your actual total employer contributions? The fact pattern, plus the phrase "small law firm" has my radar up a bit that there might be other problems lurking.

In all my years of working on ESOPs I am not sure I have seen a 1042 and rebalancing. But my initial reaction is your on very dangerous ground. 409(n) reads: In generalA plan to which section 1042 applies and an eligible worker-owned cooperative (within the meaning of section 1042(c)) shall provide that no portion of the assets of the plan or cooperative attributable to (or allocable in lieu of) employer securities acquired by the plan or cooperative in a sale to which section 1042 applies may accrue (or be allocated directly or indirectly under any plan of the employer meeting the requirements of section 401(a))— Getting any of the 1042 shares is a problem. I think even non-1042 shares strike me a possible problem. You will note this talks about "allocable in lieu of" and "directly" or "indirectly". I have always understood this to mean any kind of backdoor attempt to get this person made whole isn't allowed. My initial reaction would be to rebalance the non-1042 shares and 1042 share in a separate calculation that gets this guy equal to the rest of the people for those shares. It could mean his ratio is different that others or some other kind of provision. But I would be very wary of anything that makes the plan act like he is basically getting 1042 share directly or indirectly with the rebalancing. if there is no difference in the total number of shares he gets if there was or wasn't a 1042 allocation would seem to point to the idea this person has been given shares in lieu of or indirectly for the 1042 shares. And rebalancing seems like that is happening. Cautious thinking might make the two provisions not workable which might be why I haven't seen it. Although with so many of the ESOPs being S Corp ESOPs and cap gain rates having been so low for so long there are simply less 1042 transactions. I am not going to pound the table and say I know for sure you can't do it but those are the issues I see.

For TPAs the uncertainty is whether or not their clients will survive this and be able to pay the plan admin bills. This won't show up in the first 8 weeks, but we will know more soon enough. Article in NYT yesterday suggested 40% of small business going away. So yeah, there is plenty of uncertainty to go around.

People always look for things to worry them; advisors get paid for explaining to their clients things that maybe they should worry about. I am not worried; these words are important: Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Let's say I have plenty of cash on hand in April to cover my payroll costs for the 8 weeks, mostly because my income is clustered in Jan - March, and Nov-Dec. There is LOTS of current economic uncertainty, and my cash flow may dry up (just like a closed restaurant) if my clients can't pay their bills due to the same economic uncertainty. So, I believe the current economic uncertainty makes it quite likely that my ongoing operations could be drastically affected by the shutdown. It doesn't say the "ongoing operations during the 8 weeks", just the "ongoing operations". They have said they are going to look at all the PPP loans over $2mill. If you are in that category, you should have legitimate worries about your ongoing operations, but the "economic uncertainty" phrase will make it very hard to challenge an employer's certification since, it is "uncertain" and that is all that should be required.

ok I guess that is the bone of contention. I say it is the same.

I'd like to agree to disagree but I can't fathom what you are saying. If a pooled account has $1 deposited in January, you can tell me the allocation the minute it goes in?

But that's exactly how a pooled account works. Are you saying the employer would deduct $100K and allocate $105K as a contribution? Isn't that problematic? I'm having a really hard time wrapping my head around this. Take the inverse where they lost money - deduct $100K and allocate $95K?

My understanding is that he might be able to. If he meets the criteria to be considered a "qualified individual" as outlined in the CARES Act, couldn't his RMD from earlier this year qualify as a Coronavirus Related Distribution as defined by the CARES Act, which would allow him the ability to pay it back and not take the tax hit? If he doesn't meet the criteria, then I do think he is out of luck.

For now, you are out of luck. We are hoping (maybe even anticipating) that IRS will grant additional time for these rollovers; such relief has been officially requested (among other issues). We shall see..

The way I'm reading this is that repaid amount is treated as a rollover contribution, and would therefore not be included in the top heavy ratio. If the coronavirus-related distribution were an in-service distribution, that amount would of course be included in the top heavy ratio for 5 years.