MoJo

Wow! Can I borrow your magic wand?

Four month regularly would be nice, but alas, it's rare. We seeing more 9 months to 15 as the more typical.

We've experienced turnaround times of 4 months to two years - with no rhyme or reason as to why (i.e., not based on complexity). We try to set expectations appropriately, but clients generally aren't happy. Something about "certainty" that they expect. We resist the urge to call the IRS for status - as poking a bear has never yielded good results. Something about being asked to rush usually means a cursory review and questions that h ave already been answered had a more thorough review been undertaken.

So? Ever read other statutes? Congress has no concept of how plans are operated.

Groom also confirm their opinion that this was indeed optional - based on that same IRS guidance for Katrina relief (and in Groom's opinion - as is their nature - this is a "no-brainer.")

You are suggesting that this is a rolling one year deferment for each payment deferred in 2020. I would read it that way as well - but have no clue how that would be administered. I listened in to the PSCA Legal and Legislative committee meeting yesterday - on which Groom Law participated -and they said "there was wide latitude" in implementation here, and referenced IRS guidance for a virtually identical provision in the Katrina Relief bill - with that IRS guidance issued in (I believe) 2005 that provided a safe-harbor for implementation of that provision. I haven't found that guidance - although Groom said they were not aware of anyone who actually followed the safe-harbor.

I can read. Plain language. It's how I was taught in law school to read statutes. The Act specifically says "payments due" in 2020. Says nothing about payments due in 2021. Words have meaning, and the absence of words has meaning as well.

How do you get to the conclusion that a payment due 1/15/21 can be deferred for a year? The Act says "subsequent repayments" shall be adjusted for the accrued interest. Not adjust for further deferral....

I agree completely!

We have requests pending. What do we tell the participants?

I agree that the amount is de minimum - but what do you do with payments due in January of next year? The statute does not say they are deferable - hence they must resume lest the loan go into default.

I agree - but do you re-amortize as of 1/1/2021 (because you must to make it work), or do you wait until 4/1/2021 and do it, and do you not start payments again 1/1/2021. I agree that my interpretation is impractical - but show me how to interpret it otherwise.

Yes, it is subsequent if it is due in January 2021, and the payment deferred is April 2020. Are you saying that it isn't subsequent to the LAST payment deferred (in your scenario, March 2021), and if so, how do you get to that determination within the language of the CARES Act. Explain to me how you consider a January 2021 payment as being deferable under the CARES Act. I'm just reading the text which says you can defer payment DUE in 2020. It says NOTHING about deferring a payment DUE in January 2021.... Please prove me wrong! I prefer your approach, but my background says that's now how you interpret statutes.

So then you need to re-amortize effective with the payments due in January of next year - not starting in April, since you can't "defer" that January payment(s) and it is a "subsequent payment" that needs to be adjusted.... Playing devils advocate here - but these are the issues being surfaced.... I prefer your approach, but....

Except the Act specifically says only payments due in 2020 can be deferred. How do you justify deferring next January's (and February's...) payments until April 2021?

That is how we are reading it as well - and frankly, it's causing some consternation in that once payments resume (1/1/2021) the "system" won't know where to apply that payment (the default is the longest outstanding missed payment - which would be the April 2020 payment(s)) and then miraculously on 4/1 everything changes due to re-amotization. By the way, there is some chatter that "each" payment due in 2020 is defered for a year (i.e. April 2020 => April 2021, May 2020 -> May 2021, etc.) I can't imagine how that could be administered (reamortizing every month as payments deferred come due) and we don't believe it is what was intended. How are others dealing with this?

I'm not a CPA either - but I would expect that there may be various ways to recoup. Depends on the amount of taxes one owes as to the best way to recoup it. Taxes on $100k - even if spread over three years might be more than one needs to pay in total. Might be best to get a refund rather than eat it up over time.

We're taking the position that the participant needs to handle it. It might mean amending their past returns to recoup taxes paid - unless the IRS comes up with a different approach (doubtful IMHO).

Why are you asking if they have been diagnosed? Our forms says (and I'm paraphrasing here): A "qualified individual" is defined as: 1) diagnose, spouse dependent; 2) suffered an adverse financial consequence as a result of ...." and then the verification: "I certify that I meet one or more of the criteria to be considered a "qualified individual" as described above." Get their signature, a date and move on. I don't *want* to know why they qualify, and the Act allows reliance on the self certification. Period.

Write up from the offices of Bob Toth: https://www.businessofbenefits.com/2020/04/articles/uncategorized/care-act-suspension-of-loan-repayments-is-it-the-employers-or-theparticpants-choice/

Actually, it'll work in more situations than just owner only. A small firm, with a wide disparity in wage may benefit as well, but at a cost. A small law firm, for example, with 10 lawyers and 4 staff may implement it, at the cost of a QNEC to cure the ACP failure - which might be insignificant enough to justify doing so. In addition, a (very) large firm with many HCEs who can make use of the top paid election to "eliminate" a number of highly paid individuals from being "defined" as HCEs can do so - but only with respect to the NHCEs. We have as a client a large law firm (1000+ employees) who do this - which effectively allows the associates - who would be HCEs but for the top paid election to make these kinds of contributions/conversions. Of course, staff can also do so if they choose. It's a numbers game.....

I would agree - and suggest it is in "most" states....

I regret that I may give but one "like" to this....

...or he simply named her as bene after the divorce... Amazing how many times we've seen that. Bottom line - get in touch with the plan sponsor and ask questions. Then talk to your attorney.

I think it all boils down to what you mean by 3(16) services. Everyone has a different definition of it. In many cases, service providers (recordkeepers, TPAs, etc.) already s"do" many of hte things 3(16) fiduciaries tout - but do so in a ministerial fashion. We handle hardships, loans, distributions, QDROs cash-outs, rollovers in and a bunch of other stuff - without (I hope) becoming a fiduciary. We don't do "payroll" and related components, not do we "sign" the 5500, not select other service providers, but....