We use the immediate and heavy financial need safe harbor definition, including expenses incurred as a result of a FEMA declared disaster.  The regs provide the employee's principal residence or place of employment at the time of the disaster must be in an area designated by FEMA "for individual assistance with respect to the disaster." 

I interpret this to mean that just because a state/area is declared a disaster, that isn't sufficient for a hardship but rather must be eligible for FEMA's individual assistance program.  So while FEMA's site (https://www.fema.gov/disasters) provides that most, if not all, states are declared disasters due to COVID-19, only a few states appear eligible for the individual assistance program. 

I've seen conflicting interpretations stating that if a state is declared a disaster, that is sufficient for a hardship. 

Any thoughts would be appreciated! 

Any other recordkeepers struggling to keep up with the demand of distributions during Coronavirus? Argument suggestions for participants unable to time the market? Suggestions for limiting liability?

Two 401k sponsors have received calls from the Wharton Group about a new DOL requirement for a third party 5500 review, which they are offering to provide. Is this a scam or has DOL implemented a new rule to require a third party to review 5500s? Employers in question have 25 or so participants.

Of the many requests for CARES Act instructions service providers send, some ask whether a plan’s sponsor prefers a halt on minimum distributions.  Some ask that question even of a § 403(b) plan’s sponsor.  Further, some ask the question without considering that the IRS-preapproved document the same service provider furnished makes clear that the plan imposes no involuntary distribution to meet a minimum-distribution requirement.

26 C.F.R. § 1.403(b)-6(e)(2)

https://www.ecfr.gov/cgi-bin/text-idx?SID=927705f9b141c0337a5dd365003a368b&mc=true&node=se26.6.1_1403_2b_3_66&rgn=div8

26 C.F.R. § 1.408-8

https://www.ecfr.gov/cgi-bin/text-idx?SID=927705f9b141c0337a5dd365003a368b&mc=true&node=se26.6.1_1408_68&rgn=div8

Unlike most BenefitsLink posts, this one asks no question.  I put it here only so those reading for CARES Act ambiguities see another point.

Would the Participant in the example below be considered as experiencing "adverse financial consequences as a result of being quarantined" and qualify for loan deferment?

Example: Participant: has 401k loan but has not had a reduction in hours/pay due to COVID-19; Participant's Spouse: lost job due to COVID-19 (not diagnosed with COVID-19 but cannot work)

CARES Act Qualified Individual: to an individual (a) who is diagnosed with COVID-19, (b) whose spouse or dependent is diagnosed with COVID-19, or (c) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, had hours reduced, or other factors as determined by the Secretary of the Treasury during the COVID-19 pandemic

Filing VCP for a SIMPLE IRA and the forms are asking for the 3-digit plan number.  Do SIMPLE IRAs really have plan numbers?  Should I leave it blank or just put 001 in there?  Thanks.

I represent an apprentice fund that was originally organized as a 501(c)(5) labor organization. It decided during 2019 to apply for recognition as a 501(c)(3) because it qualifies as a school. In preparing the Form 1023, there are a lot of questions about relationships and the instructions to the 1023 do not address how to respond to these types of questions. For example, Part V. line 2a asks if any of the officers, directors, or trustees are related to each other through family or business relationships. It is not clear how far family relationships extend, such as whether in-laws would be included and it is not clear from the list of trustees whether any of them are in-laws to any other trustee or officer or director. As far as business relationship, is a union trustee who is also an officer of the local union in a business relationship with him or herself or with other trustees who are similarly situated? Part V, line 1c asks whether any of the officers, directors or trustees are related to the highest compensated employees or highest compensated independent contractors who are listed in 1b or 1c above. Again they are asking about a family or business relationship. Part V, line 3b introduces a new term. It asks whether each of the officers, directors, trustees, highest compensated employees and highest compensated independent contractors receive compensation through any other organizations related to the organization through common control. I noticed that the IRS Regs at Section 1.414(c)-5 contain regulations for determining whether tax-exempts are under common control. There is not an overlap of employer trustees among any of the funds established by the local union but there is overlap on the union trustee side. In fact, one or two of the trustees of some of the funds are either also trustees of some or all of the other funds as well as officers of the local union. Given that the union local is very small in membership, it is likely that the officers ol the local, who appoint the union-side trustees would appoint themselves as trustees to one or more of their funds. Is this sufficient to give rise to common control?  Next, in Part VIII, line 15, another new concept is introduced. There, the question is whether the organization has a close connection with any organizations. What is a close connection? Is it overlapping union trustees of a small local union? Does it mean that two or more funds sometimes, often or seldom work together to accompish the same or similar goals? Since the instructions are silent, is there some guide book toward preparation of a 1023 that explains these concepts in greater detail?

I just wanted to make a quick introduction post, I hope this is a good place for it?

My name is Jeremy. I work for a small marketing agency and one of our clients is in the employee benefits business. We mostly do their SEO and link marketing. I thought joining this community might be a good way to gain further insight into the field. I do hope that is okay? Of course I'll also be on the look out for opportunities to share my knowledge and help out the community as well. Happy posting!
 

CARES § 2202(b)(1) refers to a loan “made during the 180-day period beginning on [March 27.]”

Of the many explanations law firms, accounting firms, retirement-services providers, and others have published, some describe the end of that period as September 23, and some say September 22.

Many BenefitsLink mavens are careful about how to read a text, and about how to count things.

What do you say: does the 180-day period end on September 22 or 23?

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