austin3515

Thank you! The difference is NOTHING. Nothing compared to the sheer impossiblity of a recordkeeper doing that correctly. It's just impossible, and the difference is like 4%. Even if the recordkeeper culd do it, the client cannot be expeted to a) begin payments in January 2021, and then b) increase payments in April 2021 for Joe, May 2021 for Steve, and June 2021 for Bill. By the way, my amortization schedule just smooths out RatherBeGolfing's method.

I run my "negative am" schedule through 1/1/2021. When is the end of the 6 year period? Amortize the 1/1/2021 balance over the remainder of the 6 year period. I just think this is so critical. If the recordkeeping is a nightmare, especially for a small plan without a big fancy recordkeeper, then clients shnould be advised not to allow this. You can;t just kick the can down the road on this. You need to know what you're buying when you sign off on the deal.

"I agree that my interpretation is impractical - but show me how to interpret it otherwise." When I tried to follow the statute as closely as possible what I found was that the payments only shifted a de minimis amount. The statute says to reamortize - not to double payments in 12 months. If you take any reasonable approach at reamortizing you're going to find the payments don't change by much at all. Hence my approach is a very close approximation of what the statute says. Go ahead and try it, you'll see what I mean.

while I'm sure your interpretation is correct, can we all agree that the treatment is impractical? Also, I believe the statute calls for a reamortization of the delayed payments at some point.

Has anyone looked at my amortization schedule in the original post? If there is another way to do this I would be curious. It is so hard to follow this conversation without seeing amortization schedules. At the end of the day the question boils down to “what will the amortization schedule look like?”

Relius said theirs will be ready ASAP. The reality is that clients know there employees are in dire straits and want to let them know what the options are that are now available. Anyway I guess we are all on the same page on that front.

What is the difference really between this and SMM?

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?

Well clearly it can do no harm to formally document a corporate action. I guess I'm in the minority but I want to document the corporate action myself.

My understandings is that the way corporations dcument discretionary actions is through Board Resolutions though. Is that incorrect?

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.

Good news, you are wrong. If the rules were the same as leave of absence then this legislation would be moot. Disregarded means it doesn;t count. So the 12 months between now and pril 2021 are DISREGARDED for the 5 year rule. That means if you are 2 years in today, you are 2 years as of April 2021.

It is time sensitive though. Clients need to know how this will work before they sign up for it and allow it. Whether paymetns a) commence on 1/1/2021, and b) have to be increased on some subseuqent date after the 12 month delay is a critical question. Systems have to be in place, etc.

Someone besides me? I wold love to see it if anyone knows where it is? Do you think mine is ok?

Well in the current situation, lost wages would be easy to verify. The client can tell us that. That's plenty of support since they already have all of the records.

1. (7) Expenses and losses (including loss of income) incurred by the employee 2. We do that for our clients on the hardships. We get the documentation from the participants.

That is not correct, the are very clear that the 5 year term is now 6 years. (C) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) of this paragraph shall be disregarded. It says that 12 month period is DISREGARDED for the 5 year max. That means you get 6 years to repay. But for some reason no one is talking about this. i can't believe no one is talking about how this actually works. I can;t even get the recordkeepers to answer the question.

not all clients are adding the CARES Act stuff.

for me this is enough to approve a hardship distribution. They may not qualify for any dollars from FEMA because of whatever it is that that means, but I'll approve hardships based on that.

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? Go to this website: https://www.fema.gov/disasters From the state drop-down, select the State . Click on the “Apply" button. Click on the link for Covid-19 Pandemic (if there is one!). Make sure you click on the most recent one! Go to the Financial Assistance section. 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.

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).

So I have been playing with amortization schedules to try and figure out what it would look like taking into account the suspension. After playing with it a little bit it became clear (to me anyway) that essentially what you would do is: 1) Accumulate interest until the 1/1/2021. 2) Figure out the payment to pay it off to zero by the end of the 6 year term. If the participant, pre-suspension, had a larger payment then just start that larger payment. If its a new loan and they want to pick a higher dollar amount then let them. I know the statute talks about suspending the payments and resuming them after a 1 year delay and then amortizing, etc. I tried to play around with all of it and the differential in the payments each way I tried it was minimal. Payments are essentially only being delayed for 9 months, but we get an extra year to pay it off. I attahed my amortization schedule. If someone has a different take on how this works let me know. Am Sched.pdf

you can definitely do both. Ther is no connection between the two limitations at all. Remember the loan is not a withdrawal anyway.

I needed to decide today because I am paying everyone out today. If I say no partial term today and they don't get rehired, then I have to go back and repay everyone which is a total disaster. That nd it was 50% of the workforce and the client is thinking that they will not be back by year-end. I might have held back if there was a chance. But this is a seasonal business and their season is from now until June. So the ship sailed for this year unfortunately.

I heard that too. But based on the law today those people are 100% vested. I just don;t see how you can change the determination after the fact. That seems like quite the cutback. Mind you we have to pay those people out today too.