I believe the answer is no, but I wanted to confirm because I didn't see it expressly stated anywhere.  Can a Money Purchase Plan adopt the optional provisions under the CARES Act or is it not until age 59.5?

Thanks everyone!

Hi

Is anyone aware if the IRS office in UT open and/or accepting/processing 5500-EZ's? I have a few clients who still file paper copies and I want to have them switch to electronic filings.

I do not want the forms sit and not processed for months (hopefully will not be the case but...)

Thank you

Can a spouse beneficiary of a 403(b) tax-deferred annuity take-over the contract (i.e., assume it "as is"), or does it need to be surrendered with the proceeds eligible for rollover treatment?  What is the authority for disallowing the survivor from taking over the contract?  

FWIW, I just received two compliance statements for VCP applications filed in early August and early September 2019, respectively.  Not sure what others are experiencing in that regard.  Given recent confusion about referral to audit which was all a misunderstanding but which was rooted in how overloaded the program is, I am trying to calibrate clients' expectations about the program going forward. Would be interested to hear of other experiences with turnaround times.

Does the recent IRS Notice 2020-23 apply to Annual Funding Notices?  Would they be delayed to July 15th as well or still due April 30th?

Thanks!

A large, mid-Atlantic recordkeeper has advised our client that while it can increase its loan limit to $100k, they recommend the client not increase to 100% of the vested balance but instead stand pat at 50% (or perhaps 75% if the client feels strongly about it), citing to ERISA's adequate security requirement (one of the requirements such loans have to satisfy to come within an exemption to the prohibited transaction rules).   Has anyone else encountered this concern or otherwise got thoughts?

Accountant asked for a consult on a client's 401(k). Prospect apparently did not review TPAs allocations of SHM and contributed an amount equal to the SHM plus an amount equal to employee deferrals as the SHM contribution.  Upon instruction from bookkeeper, the difference was allocated to the profit sharing portion of the plan.

His client discovered and hit the ceiling, insisted the money be returned to the company, although he was told by the fund holder the money could only be returned with their check to the Plan, or held in an unallocated account.

Client insisted on a check to the plan, which he endorsed as trustee and deposited into his business account, although he was advised of the ramifications of so doing.

Apparently the profit sharing doc called for a new comparability allocation, which was done.  The fund holder, upon instruction from TPA, reallocated the funds, but apparently improperly.

Accountant asking for advice on how to clean up.  I would think the under-age or coverage that was taken from each participant's account would be reallocated to the affected participants on W-2 for the year of correction, not the year the contribution was made?

I ain't doin' it.

Unlike a CRD which is an entirely new type of distributable event, it is my understanding that the CARES Act loan provisions must work in concert with existing loan procedures.

If accurate, and if the plan allows for residential loans to be paid back over a 15 year term, can a qualified individual who is in the middle of building a new home request a $100,000 loan with a 15 year term, assuming all $100,000 is being used to pay construction costs and assuming the plan is amended to allow the increased CARES Act loan limits?

The only mention that I think I see in the Act regarding 5 years is with respect to delaying payments, not with the actual term of the loan.

It seems this would be possible, but once again, I'm looking at a recordkeeper's new CRL form that specifically says the loan can only be for 5 years, so maybe I'm wrong.

Thanks for any clarification.

Does anyone know if the IRS will issue a PLR on the church plan status of a proposed retirement plan?  Sponsor would like to adopt a plan but wants to know what they are getting into. 

I know Rev. Proc. 2020-1 states will not issue a PLR on a "hypothetical situation or alternatives of a proposed transaction," but it's not 100% clear to me the proposed adoption of a plan falls into those categories.

Thoughts?

After a week of parsing through the analyses and commentaries, it appears that a general consensus has emerged that all of the CARES Act benefit provisions (RMD waiver, coronavirus -related distributions, loan maximum and loan repayment suspension) will be treated as optional. 

With regard to the RMD waiver, in 2009 the IRS even allowed companies to have participants choose whether to take the RMD.

Is that the conclusion you guys have reached?

My wife has been enrolled in her employers 401k for 5 years. She just realized they they have never deducted from her check nor made a contribution in that time. The 401k is active but her employer states it is not. We’ve come to learn her employer never gave her name to the payroll department of the 401k company. Is she still entitled to the match even though they never took money out of her paycheck. She’s enrolled in 4% deduction to get a 3.5% match. We are willing to deposit money to get the match

I am unclear when repayments must begin for a new COVID-19 related loan.  In other discussions:

Per EBECatty said, the Act says '"In the case of a qualified individual with an outstanding loan (on or after the date of the enactment of this ACT)" which SUGGESTS that this applies to even new loans (since they would be outstanding after 03/27/20).

• Is this specifically addressed, or just one person's interpretation?
• When writing a new loan, when do we make the first payment due -  Same as normal, 1 year later, or perhaps some other date (at participant's choosing?) up to a year later?

Since RMD's are suspended under the CARES Act, what does that mean for the 5498 reporting?  We've provided IRA owners forms 5498 in January showing RMD amounts in boxes 11, 12a & 12b.  However, we are not required to file 5498's with the IRS until 6/1/2020.  Should those amounts be zeroed out prior to submitting to the IRS since an RMD is no longer required (even if the taxpayer already received their RMD notice)?

If the plan allows for Corona Virus distributions.  Can they limit the distribution to be from only sources that are fully vested?

Thanks!

Client has a safe harbor non-elective 401(k) stand-alone, you'd think DOL would offer some sort of relief, like "due to CO?VID-19, employers can elect to stop SHNE contributions" without a 30 day notice (since a notice was not required for 2020 anyway; and all employees would know why.  Also, if the client stops the SHNE, thus required to ADP test from the beginning of the year though the date the contribution ceases, obviously the plan would fail ADP.  Isn't the purpose of the SH contribution to avoid any testing issues.

Now that most of the recordkeepers we work with have put together their strategy for handling CARES Act provisions, I'm wondering how other TPAs are handling situations in which the plan does not want to adopt the CARES Act provisions, but a participant would otherwise qualify for the tax relief on a distribution that is permitted under the plan?

And hopefully I'm just not thinking this through properly and it is not even a problem.

But I just heard from one of our recordkeeper partners that if the plan does not complete their "opt-in" form, we are not able to use their CRD distribution form. 

So let's say the plan allows for inservice distributions at age 59.5.  A participant, age 60, has work hours reduced and would be a qualified individual.  The participant requests an inservice distribution under the current plan terms.  If we can't use the recordkeeper's new CRD form, I'm assuming the distribution would be processed as a distribution eligible for rollover with 20% withholding. 

Also, for some of our clients we prepare the distribution package that includes the recordkeeper's election form.  If other TPAs are doing the same, are you now putting both a regular election form and a CRD form in the package with instructions for completing the proper form based on qualified status?  Or are you trying to determine the status before sending the forms?

Thanks very much.

I tried to use my HSA credit card and it was declined.  I logged into my HSA manager website only to see that >$5K had been transferred out of my account, reducing the balance to zero.  When I called them they said that it was a use it or lose it situation and they sent it back to my previous employer, company A.  I had worked for company A for a long time until April 2019 when my job was sold to company B and a new HSA was started.  I remember getting the option to transfer the old HSA to the new one but didn't see any point in that since I had a card for the original HSA and everything had always been fine.

I don't believe I received any notice about this and I thought that this was my money and they had no right to do anything with it not directed by me.  I've put in a call to company A HR but who knows how long that will take these days and I wanted to try and understand as much as I can about what has happened before I talk to them.  My HSA management company that did the transfer just says I have no balance so they can't help me.  I said they can't just give my money to whoever they want but apparently they can.

I just retired and was counting on that money for medical expenses and still can't understand how they can just give it back to my employer.  If anyone has any ideas how to determine if they did something wrong or were withing their rights I'd appreciate hearing about that.

A single member plan participant would like to invest in Gold.  In an IRA the rule is that the gold must be held by a custodian.  Is that the same for qualified retirement plans?  Is this single member "solo" plan participant allowed to invest in say Canadian Maple Leafs and keep them in his safe deposit box?

Thanks

Are penalty-free COVID-19 related withdrawals allowed for DB plans?

Received this question from a CPA:

"An S Corporation filed their tax return by the 3/16/2020 deadline, and now has decided that they want to amend their tax return. The amendment would make an accrual and contribution to their retirement plan. I know they were supposed to put their tax return on extension for making this contribution, but I’m wondering just how bad it would be if they did this anyway? I think if the IRS did an audit and the payment wasn’t paid by the deadline including extensions, then they can disallow the deduction, so in that sense they will be rolling the dice with the IRS, but are there other issues, perhaps fiduciary liability issues, that I should make the client aware of?"