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.

I have read several commentaries saying that the increased loan maximum for "qualified individuals" is an optional change, but that the loan repayment provision is mandatory. Any thoughts? Thanks.

I have seen some discrepancy in summaries of the RMD rules for 2020 under the CARES Act. Section 2203 (a)(I)(ii) says that the RMD rules are suspended for 2020. Section 2203(a)(I)(ii) adds what I thought was a special rule/clarification that required beginning dates in 2020 are effectively suspended. 

But, I have seen summaries that imply that the RMD suspension ONLY applies for distributions for those participants with required beginning dates in 2020. 

So, which is it: are all RMDs suspended in 2020 or only those for required beginning dates in 2020?

Believe it or not, I am working on valuing a DB plan that is only now moving to using individual data.  Back in the 80s/90s, when this change was happening how was the change defined in the FSA? (it's before my time) Any feedback in this would be helpful.

For Qualifiying Indviduals under CARES, the 25% excise tax does not apply correct.  CARES says 72(t) does not apply and the 25% penalty tax is in 72(t).

How would venting work for an employee who left after 3 years of service (40% vested) and received a cash payout with the rest being forfeited-but then returns two years later and is allocated new shares for another year and a half of service but then once again leaves the plan

Plan's loan program allows a participant to refinance their existing loan.  Currently allows for only one outstanding loan.

Under the "normal" rules, the participant has a small amount of cash available in a refinance transaction.

If the Plan adopts the Covid loan rules, and assuming the participant is a qualified individual, can they refinance the existing loan using Covid expanded loan limits and payment suspension?

As a follow up, I've seen it indicated elsewhere that a plan that does not normally allow for loans can adopt the Covid loan rules and allow Covid related loans only.

Is it a stretch then in a situation like this, that the Plan could allow for a new Covid loan by adopting the Covid rules and maintain the one "normal" loan restriction? 

So in the example, the participant would be permitted to have one normal loan and one Covid loan, without having to change the "normal" loan policy and would then not need to refinance the existing loan?

Thanks very much.

is spousal consent still required?  can't find it anywhere. 

Hi all-

Has anyone heard if IRS is going to provide guidance regarding RMD notices that were sent for 2020?  I know that IRS provided guidance for the SECURE Act saying that if we had already sent RMD Notices to those who had not obtained age 70.5 by 12.31.19 that we could send a corrected notice by 4.15.2020.  But with the CARES Act and no RMD required for 2020, are we required to send a notice to RMD age clients stating they are not required to RMD for 2020 but must restart for 2021?  Anyone know?

With everything going on have a client that would like to switch from safe harbor non elective to safe harbor match.  Can this be done mid year?   None of the safe harbor non elective have been contributed yet.

In light of the COVID-19 effects on a lot of small businesses, I have been asked today about what kind of notice (30 day) or what does the Employer have to give to participants if they want to stop the match for the rest of the year.  Can they even do that with the safe harbor match?  I think so, but then the plan would have to submit to ADP testing, correct?  Did the CARES Act give any guidance in this area?    Thanks

I have a client (under age 59.5) that wants to buy life insurance with his 401k/Profit Sharing account. 

He has been a participant for 15 years so I don't think there is any issue with "seasoned money" since the plan document also states that after 5 years this is a non issue.

Could I be missing something?

Can he use any source to buy life insurance or does it have to be employer sourced since he is under age 59.5?