I was drafting a Coronavirus-related distribution application form, which included the certification that the applicant is an eligible individual. The question I have is since the employee has to represent that s/he has been diagnosed with Coronavirus, that a spouse or dependent child has or that s/he has experienced adverse financial consequences, the first two trad awfully close to HIPAA protected health information. Fortunately, this client has a TPA that will be administering this provision (as well as other facets of the plan). The question that I have is does the possible application of the first two grounds of qualifying for a coronavirus-related distribution subject the plan to all the HIPAA privacy requirements? I would like to hear your thoughts on this.

I am confused two sites I use have different answers to the same question.  It is in regard to if I can extend a participants loan past 5 years because of the CARES Act.   Here are the excerpts from their websites:

Website 1)  However, a participant with an outstanding plan loan who is placed on an unpaid leave of absence may forego making loan payments during the leave of absence without triggering taxation of the loan, provided the following requirements are met:

1. The unpaid leave of absence does not exceed one year.
2. The loan must still be repaid by the end of the original term of the loan. Thus, the participant may make up the missed loan repayments upon returning to work, resume the original repayments with a lump sum payment of the missed repayments at the end of the term, or increase the amount of each repayment for the remainder of the repayment period upon returning to work.

Website 2)  Any participant loan payments due from Qualifying Individuals between March 27, 2020 and December 31, 2020 can be delayed for up to one year. If this one-year delay applies, the normal five-year maximum repayment term is extended to six years

See my confusion, one says must be repaid by the original term of the loan and the other says I can change a 5 year loan into a 6 year loan.

Can anyone clarify for me?

Thanks.

Has anyone received formal guidance on calculating  Self funded health plan cost for the PPP application? I know you have to back out employee contributions.

The banker indicates it has to be on a cash basis; so if true, that would rule out a few methods. Haven’t seen any guidance yet. Carrier has not advised yet either.

so it is clear that the 402f notice is not required. What about something stating 10% is default withholding (unless chosen otherwise) and the repayment period and the stretch taxes and all that jazz? seems like it should be required, but is it in notice form?

I have a client who took his RMD in January 2020 for 2020 from his IRA.

Due to CARES can he put it back in the IRA now?  It has been more than 60 days since he took the RMD.

Advice please.

So client amends the plan to add all of these wonderful new options.  What are the obligations to tell the participants about the options?  I happen to think we should be telling them about the options proactively.  Perhaps that is based on more on ethics than law though.  What is the law?  

If a plan sponsor maintains both a cash balance plan and a defined contribution plan and the plans are top heavy, it is my understanding that the top heavy minimum must still be funded, regardless of the DB plan’s frozen status. But my question is, would that contribution amount be 3% or 5% and would the amount depend on the contributions funded by the Key employees?
 

Available for DB plans?

I assume plans would need be amended to include a withdrawal provision and then add the $100K COVID-19 language?

I believe I have the answer, but can't seem to find the actual language so I apologize.  In the 401(k) + Cash Balance Situation, when calculating the EBAR to test both plans combined would you include the 3% Safe Harbor in the equation?

Again, I apologize if it is a simple question just can't seem to put my fingers on it.  Thanks again everyone!

I apologize if this has been asked before, but has it been established that if a spouse gets furloughed/loses hours a participant falls under the "adverse financial consequences" to determine eligibility for the in-service distribution/loan under the CARES Act?

Thanks everyone!

Just curious on how others will treat the new distributions for top heavy testing purposes.  The main concern is the ability for participants to contribute the funds back into a plan.  If the money isn't paid back, I assume it'd just be treated like other in-service distributions. 

If the money is recontributed though, would these funds be ignored?  Or would the balance associated with it be included in the top heavy balance (and then you'd probably have to back out the in-service so it's not double counted)?

Thanks for your thoughts!

Can anyone confirm if the disaster area declaration for the state of California is sufficient for the new hardship reason for disaster areas.  The hardship reason mentions that the employee's principal residence or principal place of employment was located in an area designated by FEMA for individual assistance with respect to the disaster.

When I look up the declaration on FEMA for California I do not see dollars designated for individual assistance, only of Public Assistance.

I see in the declaration though the dollars are available for "crisis counseling" for individuals.

Does anyone know if we can apply the hardship reason here in California, assuming of course the plan was or will be amended timely.

Thanks very much.

We are getting many calls to submit the 12 month suspension request to the recordkeepers for loan repayments by participants who were laid off from their jobs.  Would there be any advantage or disadvantage to waiting until closer to the end of the cure period to submit the 12 month suspension form to the recordkeeper?

Have a profit sharing only plan with a current plan year end of 6/30/20. They have talked about changing to a calendar year end. Is it too late to amend for a 12/31/19 plan year end? They extended their taxes so would still have time to make payment. Or did they have to amend before 12/31?

Are people recommending a board resolution to discontinue a discretionary pay-period match?

How about to start a discretionary pay-period match?

I have always done it, and there is a bit of a disagreement in the office of how important it is.

When a retirement plan has always used a safe-harbor regime (or has used one for many years), the plan’s sponsor might lack information to predict what coverage, non-discrimination, and top-heavy test would show absent the safe-harbor treatment.

Consider, while a good-enough sense of this information might be obvious to those with the data, it might be almost an unknown to the plan’s sponsor, and might be a complete unknown to the plan sponsor’s lawyer.

If a plan’s sponsor wants information to help the sponsor decide whether to discontinue a safe-harbor contribution, how quickly does a recordkeeper or third-party administrator turn around that testing?

(While I know it’s often not a realistic assumption, assume complete and clean data.  And assume the service provider’s fee is paid in advance.)

What 1099-R code should be used for a coronavirus related withdrawal for a participant under 59 1/2?  Can we use code 2 so they are not subject to penalty or use code 1 and let them sort it out when they do their tax return?

Shout out to Derrin Watson who on the ERISApedia webcast today provided an important clarification regarding hardship distributions under the FEMA provisions, as described below.  The definition is more specific then I had realized.

Abridged version of the reg:

(7) Expenses and losses (including loss of income) incurred by the employee on account of a disaster declared by the Federal Emergency Management Agency (FEMA) …provided that the employee's principal residence was located in an area designated by FEMA for individual assistance with respect to the disaster.

 How do we know if the state was in a FEMA disaster area that was designated for Individual Assistance?

1. Go to this website:

https://www.fema.gov/disasters

2. From the state drop-down, select the State .  Click on the “Apply" button.
3. Click on the link for Covid-19 Pandemic (if there is one!). Make sure you click on the most recent one!
4. Go to the Financial Assistance section.
5. If it says “Individual Assistance” then the employee is eligible for these hardship distributions.  If for example it only says “public assistance” then it does NOT qualify.

Hi, 

The ppp loans cover retirement plan contributions. While it is highly unlikely, does this by any chance include DB Plan contributions? Thank you.