One of my plans limits the number of loans to 3.  Does the CARES Act override that or can the Plan continue to limit the number of loans under the law?

Here's some reporting on what American Retirement Association said.

https://www.pionline.com/defined-contribution/small-dc-plans-risk-termination-amid-coronavirus-outbreak-ara

Can the new $100,000 distribution be taken from employer contributions to a custodial account?  403(b)(7)(A)(ii) prohibits hardships from the employer contributions.

The CARES Act statutory language says a distribution satisfies 403(b)(7)(A)(i).  But doesn't reference (ii).  

Probably a drafting error, but just want to be sure.  

We have a client with a SIMPLE IRA that wants to suspend their match.  CARES Act addresses 401(k) but I can't find if SIMPLE IRA is included to allow mid-year suspension.

Plan states loans are due an payable at termination of employment

Participants can not continue to make loan payments after they terminated

The cure period for one term participant ends 3/31/2020 and  6/30/2020 for another participant

The CARES Act states if the due date occurs during  the period beginning on the date of the Act and ending on 12/31 the due date shall be delayed for one year.

Questions-

1. Are these participants eligible for the 1 year delay?

2. Does this mean their cure period is 1 year from the 3/31 or 6/30 date?

3. How does the plan document and requirement that loan payments by terminated participants are not accepted impacted by the  CARES Act.  Lay-offs, furloughed participants can they continue to make loan payments, or will the document need to be amended to allow for these payments.

It seems to be generally accepted that the CARES Act provision for coronavirus-related distributions from company plans is optional -- not mandatory. What about distributions from IRAs?  After all, the section 2202(c) amendment requirement applies to "annuity contracts and plans."

Also, what about the RMD waiver? The same amendment requirement in section 2202(c) is also in section 2203(c)/

If a plan does not ALREADY allow for loans, or hardship/in-service for that matter, must the plan amend to allow loans by 12/31/2020, and then subsequently (or concurrently) add the Coronavirus provisions, or can the entire loan provision have the extend deadline of 12/31/2022?

Facts: Clients company is acquired via stock sale, but TPA wasn't made aware until two months later. Therefore, there were no actions taken to terminate the plan.

Question: Since they can't really terminate the plan retroactively, what can be done at this point?

Does anybody know if the 30 day waiver form will be required to be signed by a participant for obtaining a Coronavirus related distribution? I am thinking no since the Section 402(f) notice does not apply? Any thoughts?

A participant has been repaying their plan loan as slowly as possible, i.e., relying on the IRS cure period for every payment - for example, any repayments due during the first quarter of 2020 wouldn't be paid until the end of June.  With the passage of the CARES Act, could the repayments due during the first quarter (or at least prior to March 27, 2020) now be postponed for 1 year, or do you think the Act allows only postponement of repayments originally due after March 27th, without the application of the cure period?  

I realized a nice surprise has fallen into my lap this week.  (Sarcasm implied)

A control group of 3 employers had 2 plans.  Employer wanted to consolidate the 2 plans into 1.  The 2 employer plan has a plan year end of 3/31/2020.  The employer merging in has a plan year end of 12/31.  The money from merging in plan was moved at beginning of Jan 2020.  I just noticed the nuance to this and started asking questions....   I don't do the takeover stuff.

Does the plan merging in need a short plan year to match up to the same plan year end?   Seems like a "yes" to me.

Any guidance would be appreciated.

Thanks

Good afternoon to all,

I have been asked to get your input on the following question:

"Can a " 3508 direct seller" person participate in a 401(k) Plan? They are paid by way of a 1099 rather than W-2 and are recognized as "Employees" for some benefit purposes. We do not have experience with this type of "employee". If the plan defines compensation as W-2 income then they have no compensation to defer from. Maybe they make Roth deferrals or Voluntary Employee Contributions? Any thoughts or comments are appreciated."

The questions is being raised on behalf of a plan sponsor who DOES wish to cover such persons if a way can be found to do so.  

Thank you as always.

The FFCRA provides a payroll tax credit for the cost of health care coverage provided during paid family or sick leave. A client asked about a "rumor" that he heard regarding the availability of a credit for health care coverage provided to employees on a temporary layoff (unpaid). 

I don't see anything like this in the CARES Act. Am I missing something? Thanks!!

If a 401(k) plan has a limit of 1 hardship withdrawal per plan year, does the CARES Act override this provision so that a participant can take an additional withdrawal?

I have a separate account on my ex husband pension plan and I want to get payee in a lump sum. So I can by law get a lump sum

I may be missing something, but hopefully someone can confirm. I've seen the newly permissible CARES Act "coronavirus-related distribution" referred to as a new form of "in-service" distribution (or some variant thereof). It pretty clearly seems to apply to in-service distributions, but I don't see anything that would limit a coronavirus-related distribution to in-service. Perhaps people are just referring to it in that shorthand as that seems to be the most useful practical application?

In other words, if a 50-year-old participant terminated two years ago with a $200,000 401(k) balance, does anything prevent them from taking a $100,000 distribution (assuming they are affected by the virus, etc.) and taking advantage of the favorable tax treatment of this new distribution type?

What is the correct procedure to follow when a client realizes he has filed a 5500 under the EIN of the trust?

Profit sharing plan is in the process of termination, the owners have been taking their RMDs each year.

Under SECURE ACT, does the provision of taking RMD prior to rollover apply?

Hello, I have seen a few suspension of the SH election questions already, but didn't see this question addressed. If we have a client that wants to suspend their SH election now (either the 3% safe harbor or the match, doesn't really matter), can they elect to become a safe harbor plan later in the year or after year-end based on the provisions in the SECURE Act? 

We are wondering if this is a way out of the cash flow requirements now and a possible fix later on if things turn around to avoid refunds. 

Before discussing this as an option with clients I am looking for some guidance one way or the other.

Thoughts? 

I am sure we have all read the bill and many articles.  I wanted outline three scenarios to make sure I am reading the Act correctly in regards to COVID Loans and the delay of payments.

1) We have a new COVID Loan and the participant delays the payments for 1 year.  The max loan period is still 5 years and payments that were supposed to start on 1/1/2021 will start on that date.  Payments that were supposed to start on 4/1/2020  - 12/31/2020 will start on 04/01/2021.  The loan will need to be re-amortized since interest has been accruing and even if payments were doubled the loan would not be paid off within the 5 year period.

2) There is an existing loan in effect.  Participant chooses to delay current payments for 1 year.  Let's say it is a 5 year loan and he is in year 2 of the loan.  Payments from now until the end of the year are delayed for 1 year.  The original loan payments go back into effect on 01/01/2021 and the delayed payments start back up on 04/01/2021.  We are now in year three of the loan and that loan needs to be re-amortized to make sure it does not exceed 5 years.

3) Loan is in 5th year and participant wants to delay payments for 1 year.  This is allowed and the 5 year rule is disregarded. Payment continue in next year and need the loans needs to be paid off within 6 years.

Do I have this correct???