CARES Act § 2202(b) revises or relieves Internal Revenue Code of 1986 § 72(p) to allow a participant loan up to 100% (instead of 50%) of a vested account.  But I see nothing that relaxes the conditions of a prohibited-transaction exemption under ERISA § 408(b)(1) or IRC § 4975(d)(1).

Both those exemptions require that a loan be “adequately secured”.  The Labor department’s rule (which governs for IRC § 4975 too) requires adequate security and provides “[n]o more than 50% of the present value of a participant’s vested accrued benefit may be considered by a plan as security for the outstanding balance of all plan loans made to that participant[.]”  29 C.F.R. § 2550.408b-1(f)(2)(i).

What should a practitioner say about whether to apply or ignore that 50% condition to a participant’s claim for a loan that otherwise would be proper?

My former employer has a pooled 401k account which issues an annual statement in early Spring. I retired at end of last year and had planned to rollover my money into an IRA in January but discovered that I could not request a distribution until the annual statements were issued. By the time I was allowed to request the distribution the market had tanked and my request was denied. Now I'm told that the company will be doing an interim valuation for all participant accounts including mine. Is this legit?

I have a Owner Only Cash Balance Pension Plan.  Plan was set up 12/28/2018 with effective date 1/1/2018.  2018 required funding was $80,486.  However contribution (made 9/13/2019) was $60,000.  So we have an minimum funding issue out of the gate.  Excise tax filed and paid (I believe).  2019 there is 0 cash flow to fund benefit and will result in another minimum funding deficiency for 2019 (this was known as of September, 2019 so is not COVID-19 related).  Have already reduced the benefit for 1/1/2020.  This Plan should have never been set up and completely fails the permanency requirement.

So my question here is whether 412 funding requirements apply to a disqualified plan?  Can I get the plan disqualified on permanency, terminate it and avoid a 2019 minimum funding excise tax on top of all the other tax?   

This is somewhat of a comment and question.  Like most of you out there in the pension community our firm has had to change our way of operating due to CO-VID 19.  We are a TPA Firm of 7 individuals.  Currently 5 individuals are trying to work remotely.  Our IT person set us up so that we can log in at home and access our work computer and our network.  We use the in house FIS/Relius system for our pension and document software.  Trying to get run Relius remotely was not working and we reached out to Relius about the issue.  They indicated that we would need to purchase a 12 month WAN license in order to run the pension system remotely.  I explained that working remotely was a temporary situation and that we only needed access for one or two months.

The Relius salesman reached back out to me and said that they could offer a 10% discount on their full 12 month license.  This would drop the annual fee from $3,000 to $2,700.  He also added that they could apply the $2,700 fee to the cost of the ASP service if we signed a new contract by May 31st.  Maybe other individuals out there feel that this is reasonable but to me this is a horrible response on the part of FIS/Relius.  We have been a client of theirs from the point that they bought our FDP.  I am seriously considering looking into other software systems  once life returns to normal.  

Does anyone have suggestions for a work around for the WAN license.  We cannot justify spending $2,700 for a one to two month fix.  

Thanks for any comments or suggestions.

Sponsor initially reported EE as hired in 07/2018, but turns out actual hire date was 06/13/18.  This means she entered plan 07/01/19 rather than 01/01/20, so we have lost opportunity to defer for 07/01/19 through 12/31/19.

Plan has only owner and this new EE, so there is no ADP for NHCEs other than her.  She probably won't be deferring, but I know that doesn't erase the lost opportunity when she might have deferred.  Plan has Deferrals and SH match.

Since we have no average deferral rate for NHCEs, it seems it would be best to assume 5% deferrals (minimum rate to get maximum SH Match), and 4% SH match.

Does this sound right?  What should QNEC be?  50% of deferrals plus all of SH match missed (total 6.5%), 50% of all contributions (total 4.5%), or what?

I know this probably sounds elementary, but it has been quite awhile since I had this situation.

Plan provides for a safe harbor match, allocated at the end of the plan year (not each payroll).  Calendar year plan, calendar year tax year for the plan sponsor.

Assuming notice requirement is met, the plan is amended to remove the safe harbor effective May 1, 2020.

Here comes the probably dumb question, but...

Am I correct that the timing for depositing the 2020 match accrued through May 1, 2020 is still the tax filing deadline for the 2020 tax year to be deductible for 2020, or 12/31/2021 if the year of deduction is not an issue for the plan sponsor?  I haven't seen anything that says the deposit deadline is accelerated, but that doesn't mean I didn't miss it somewhere.

Thanks very much.

Are new Plan loans permissible if the participant has been furloughed/laid off; and the Loan Agreement states that Payroll Deduction of the Loan Payment is required?

How is everyone handling this? I 

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.  

I have a client who requested a distribution due to severance from employment. She received paperwork earlier this year stating she is entitled to $X as a distribution. She turned her paperwork in in early March. The Plan administrator is now telling her they are going to do an interim valuation on 3/31 to value her account and she will get whatever she is entitled to after that date.

The Plan includes the following language:

It is contemplated that the Trust Fund will be valued by the Trustee and
allocations made only on a Valuation Date. At any time that the Plan's valuations are not performed on a
daily basis, should it be necessary to make distributions under the provisions hereof and the Plan
Administrator in good faith determines that, because of (a) an extraordinary change in general economic
conditions, (b) the occurrence of some casualty materially affecting the value of the Trust Fund or a
substantial part thereof, or (c) a significant fluctuation in the value of the Trust Fund has occurred since the
immediately preceding Valuation Date, the Plan Administrator may, in his sole discretion, exercised in a
nondiscriminatory manner, prevent the payee from receiving a substantially greater or lesser amount than
what he would be entitled to, based on current values, and cause a re-valuation of the Trust Fund to be
made and a reallocation of the interests therein as of the date the payee's right of distribution becomes
fixed. The Plan Administrator's determination to make such special valuation and the valuation of the Trust
Fund as determined by the Trustee shall be conclusive and binding on all persons ever interested
hereunder. Such interim valuation shall not discriminate in favor of Highly Compensated Employees.

Is anyone aware of any case law or statute/regulation that interprets the language in bold? I am trying to determine when my client's right to a distribution became fixed. 

With the tax filing extension from 4.15 to 7.15, does anyone know if IRS has extended Form 5498 delivery date from 5.31 to something else?

With this date of constant market fluctuation, what is considered 50% of the balance to take a loan?  Is it the date the loan was requested, approved, or processed?  Below is what is says in code section 72(p).  I have a participant who requested a max loan on 3/9 and we are processing it today.  Of course, the balance is way less today, so his loan availability is much less today.  Would it be appropriate to process it today for the balance requested on 3/9 because it was 50% on the date he requested it?

Someone is out sick and eligible for pay under one of these paid leave rules.  I have essentially no knowledge or expertise in what paid leaves are all about but now my client wants to know if they pay it, is it eligible compensation?  They DO exclude taxable fringe benefits.  Would this be considered a taxable fringe benefit?

I'm inclined to say it is because it seems to go beyond the normal "I get 3 sick days a year" type of policy where if someone stays home sick, its just part of their normal pay.

But I'm in the dark here...

The 2020 SHNE Notice was given out prior to the effective date of the SECURE ACT.  The Notice stated the SHNE contribution will be made, if the client decides that due to economic reasons, the contribution will not be made, doesn't some notice need to be given out taking back the prior notice??

If not, the participants will not be receiving the 3% contribution and they may be expecting it.

But then again, you'd be giving out a notice even though there is no notice required?

I'm sure this has happened before.  I'm just not sure how to resolve it.

1) Husband gets divorced and changes 401K beneficiary to his son.

2) Ten years later husband gets remarried, but fails/forgets/decides not to change the 401K beneficiary to his new wife.

3) Husband dies unexpectedly.

4) Son claims benefits, and Fidelity pays him.

Since it appears Federal law allows for the wife to be the beneficiary unless she has signed a waiver allowing for someone else to be the beneficiary, it appears the wife should be able to claim the deceased husband's benefits.  Fidelity claims they can't do anything about it and pushed the issue back to the employer. 

Is anyone able to give any advise on how I should approach unwinding this situation?  Is there any precedent?

Has anyone yet come up with a creative solution to the problem of obtaining spousal consent for a distribution when a) our offices are shut down for the foreseeable future and b) participants and spouses are reluctant to leave their homes to see a Notary?  Zoom-witnessed signatures with identification, for example?

We have a number of clients that are considering suspending their safe harbor match due to COVID-19. There are a couple that, after doing their 2019 year-end review, would be Top Heavy for 2020. If they suspend their 2020 SH Match, will they have to owe the Top Heavy contribution for 2020? 

Hope everyone is practicing safe social distancing.

We have a participant who makes contributions to 2 plans. We administer one of the plans.

He is an HCE and receives an ADP refund in the plan that we administer.

Later he provides proof of combined excess deferrals between both plans.

My question is whether the 402g excess deferral refund is a refund in addition to the ADP refund, or can the 402g excess be included as part of the ADP refund?

Will anyone please share information on which recordkeepers and directed trustees are willing to serve as an abandoned plan’s qualified termination administrator, and which are unwilling?

We have a client who sold his business in October last year (asset sale).  The sponsor had paid ongoing SH match, and when we look at the data from 2019, we found 1 person was overpaid $24 and 4 of the 5 who deferred were underpaid, ranging from $32 to $244.  $ is in John Hancock, and all but 2 have already been paid out.  We figure he can forget ever getting the overpayment back.

Plan is currently SH with all NHCEs in one group.  Only HCEs were owner and son, and neither deferred.

Were this a New Comp with one class per participant and no SH, and we were to count the SH paid as Profit Sharing, this plan would pass ADP and 401(a)(4) testing since Owners/HCEs got nothing.

Is there any way to justify a retroactive amendment to 01/01/19?  Any ideas?

Does anyone have access to legislative language on the final stimulus package? If you do, could you please send a link to it?

Thank you.