rocknrolls2

Thank you all, especially ratherbereading for getting the actual legislative text and ratherbegolfing for providing the summary.

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.

I agree with nearly all of the foregoing. However, at the end of the day, whether such withdrawals are permitted is a plan design decision, over which the employer has the final say. If the employer chooses to change its mind, it simply needs to amend the plan.

Unless someone is coming up on the one-year deadline for taking one, I would hold off on allowing them or processing such distributions until the IRS issues at least preliminary guidance on this. One While I agree that SECURE does not specifically limit such distributions to active employees, you might want to consider the employee's ability to roll the distribution back to the plan after taking such distribution (how long the participant has to make such roll-back is still not clear and it would be worth waiting for more clarity from IRS guidance (although I suspect that this will be limited to the 3-year period after taking the distribution)). Effectively the roll-back provision seems to generally be limited to the qualified plan in which the individual is an active participant. Even if IRS guidance were to allow a roll-back by an inactive participant, most employers would be reluctant to accept rollovers from former employees.

A client has a money purchase plan in which distributions are permitted for the following reasons: normal retirement after 25 years of service, or at age 62 with at least 10 years of service or the later of age 65 and the fifth anniversary of commencing participation in the plan; early retirement at or after age 55 (but before age 62) and completion of at least 10 years of service; deferred retirement after 5 years of service; disability retirement contingent on at least 10 years of service and a Social Security determination of disability. If Social Security denies a benefit award, the trustees shall make a determination of disability in their discretion based on proof of disability through a physician of the employee's choice. The employee has stage 5 kidney cancer. While he could qualify for a trustee discretionary determination of disability, he only recently applied to Social Security and he might not live until after it has made its determination. The only other possiibility is a deferred disability. Could the plan be amended to allow any participant in imminent risk of death to apply for a distribution of his full account balance?

As you already know, Code Section 401(a)(9)(C)(iii) provides that if a participant who is not a 5% owner has his or her required beginning date be the April 1st of the calendar year following the calendar year in which s/he retires, the plan is required to actuarially increase benefits after the employee attained age 70 1/2. When the SECURE Act increased the age for the required beginning date from 70 1/2 to 72, it did not increase the age at which actuarial increases are required to begin to be made. Is this merely an oversight or intentional? Any thoughts about what the IRS or Treasury intended to do in this provision?

A situation has arisen where a plan has determined that a participant had been overpaid in her pension benefit payments. The plan intends to recoup the overpayment by asking the participant to agree to have amounts deducted from prospective pension payments over several months. Is there a specified percentage limit of pension benefit payment that must be applied in determining the maximum amount that may be deducted from the participant's prospective pension payments? If so, what is it and what is the statutory or regulatory citation where such limitation can be found?

A group health plan provides for all of the categories of benefits under essential health benefits. An employee covered under such plan was hospitalized for two days in connection with surgery. He had made a $1,000 copay payment at the time he was admitted to the hospital. The participant also obtained pre-authorization for the hospitalization, as required by the plan. After he was discharged, he found that he was subject to a bill of just under $50,000 for his hospitalization. The plan provides for a $1,800 per day limit on reimbursement of hospital expenses. His plan paid $3,600 ($1, 800 per day) for the two days of his admission and after applying his copayment. Since hospitalization is one of the essential health benefit categories, I am concerned that this is in violation of the ACA prohibition on annual limits. Hospitalization, per the SPD, includes the following: semi-private room and board, use of operating and recovery rooms and equipment; use of intensive care and equipment, laboratory or pathological exams, x-ray exams, drugs and medicines provided by the hospital; blood transfusions and use of transfusion equipment; use of cardiographic equipment and supplies, basal metabolic exams, anesthesia supplies and equipment, oxygen and its administrationi, use of physiotherapeutic equipment and supplies and any additional medically necessary services and supplies customarily provided by the hospital. I am concerned that the $1,800 per day limit violates the prohibition on annual limits. Does anyone agree?

Thank you, your views on your contributions to the demise of money purchase plans aside. While I agree that the 25% of compensation profit-sharing plan deduction limit has made prospective money purchase plans extinct, I am also aware that many employers that had them did not do well in phasing them out. Many actually merged them into their profit-sharing plans, which imposes QJSA/QPSA rules on at least the money purchase portion. That aside, back to my basic question, I was not even thinking of adding any language in the absence of guidance. However, when you said "you will have to add," I beg to differ. In my view, it is an optional provision that a qualified defined contribution plan may add. If it does, however, it is my understanding that the statutory remedial period of the end of the 2022 plan year would not apply. If the employer elects to add it for a given plan year, it would have to be adopted by the end of that plan year.

Although it is intended that Qualified Birth and Adoption Distributions are permitted to be taken from any defined contribution plan (Code Section 72(t)(2)(H)(iv)), is anyone considering adopting one for a money purchase plan? According to Section 72(t)(2)(H)(vi)(IV), a Qualified Birth or Adoption Distribution is treated as meeting the distribution restrictions of specific Code sections (which apply to 401(k) plans, custodial 403(b)s, annuity contract 403(b)s and eligible deferred compensation plans). Does the latter section citation concern anyone who has been asked to consider whether to allow Qualified Birth and Adoption Distributions for a money purchase plan? How about as applied to a profit sharing plan without a 401(k) feature?

Very well put, Peter! I was basically trying to say the same thing in much fewer words (perhaps too few. In response to Larry, I agree that a qualified birth or adoption distribution would have to be specifically added to the plan document (subject to the timing rules referenced above) but I never intended what I said to in any way suggest that this change amended the providsions regarding permissible hardship events. The reference to 401(k)(2)(B)(i) was intended to refer to the listing of permissible 401(k) distribution events.

However, Code Section 72(t)(2)(H)(vi)(IV) provides,"Any qualified birth or adoption shall be treated as meeting the requirements of Sections 401(k)(2)(B)(i)..." The cross-referenced section lists the permissible distribution events under 401(k) plans.

I respectfully disagree that there has been no change to the age 62 for normal retirement age. There is a provision at the very end of Division M that specifically lowers thd age to 59 1/2.

You should sue the plan and the employer to protect your rights under ERISA.

An employer has a number of sites in NJ at which it employs a number of employees. NJ has a temporary disability benefit which is payable for up to the first 26 weeks of short-term disability. An employer can either use the state mandated benefit level and get the administration through the state labor department or purchase insured coverage which provides an equal or better level of benefits than the state mandated benefit with administration provided by the insurance company. Let's say this employer chose solely the state mandated benefit. The maximum weekly benefit for disabilities beginning and ending between January 1, 2020 and June 30, 2020 is $667 per week (the benefit amount is equal to 2/3 of the average weekly wage). For disabilities beginning and ending between July 1, 2020 and December 31, 2020, the maximum weekly benefit is increased to $881. Thus, let's say an employee who earns $1,321.50 per week goes out on short-term disability, effective June 2, 2020. $1,321.50 x 0.667 = $881, limited to the maximum benefit amount. Since the benefit begins in early June of 2020, assuming the employee is disabled for 26 weeks, would he get $667 per week for up to 26 weeks or would the employee get $667 per week up through June 30, 2020 and $881 per week from July 1, 2020 through early December, 2020?

An employer has a number of sites in NJ at which it employs a number of employees. NJ has a temporary disability benefit which is payable for up to the first 26 weeks of short-term disability. An employer can either use the state mandated benefit level and get the administration through the state labor department or purchase insured coverage which provides an equal or better level of benefits than the state mandated benefit. Let's say this employer chose solely the state mandated benefit. The maximum weekly benefit for disabilities beginning and ending between January 1, 2020 and June 30, 2020 is $667 per week (the benefit amount is equal to 2/3 of the average weekly wage. For disabilities beginning and ending between July 1, 2020 and December 31, 2020, the maximum weekly benefit is increased to $881. Thus, let's say an employee who earns $1,321.50 per week goes out on short-term disability, effective June 2, 2020. $1,321.50 x 0.667 = $881. Since the benefit begins in early June of 2020, assuming the employee is disabled for 26 weeks, would he get $667 for up to 26 weeks or would the employee get $667 per week up through June 30, 2020 and $881 per week from July 1, 2020 through early December, 2020?

Thank you, Effen. I guess the question I have is why didn't the IRS flag the issue when it was reviewing the plan for a determination letter?

I am working with an employer that has a plan that covers eligible retired employees. If the coverage is considered creditable, would a retiree's enrollment in Medicare Part D result in the retiree's loss of coverage under the employer's medical plan? What if the coverage is non-creditable and the employee enrolls in Medicare Part D. Would this result in the retiree's loss of coverage under the employer's plan? Can you provide a citation to a US Code provision or a regulation citation that supports your position? Thanks,

I am new to working for multiemployer pension funds. I see a number of these plans are money purchase plans and they have a concept of deemed termination of employment, in which no contributing employer makes a contribution for an employee (for say, 6 or 12 months), then the employee is deemed to have terminated his/her employment and is entitled to commence distribution of his/her account balance. In the context of a money purchase plan, the IRS treats them as a pension plan and they require that the employee have a severance from employment. Thus, as applied to those types of provisions, the plan risks disqualification because there is no determination of whether the participant must have an actual severance from employment. Is the IRS view on these deemed termination of employment provisions less restrictive in the collective bargaining context or should the deemed termination of employment provision in a money purchase plan be read as also requiring an actual severance from employment? Does anyone have any legal authority to cite either way for such a proposition?

I am new to working for multiemployer pension funds. I see a number of these plans are money purchase plans and they have a concept of deemed termination of employment, in which no contributing employer makes a contribution for an employee (for say, 6 or 12 months), then the employee is deemed to have terminated his/her employment. In the context of a money purchase plan, the IRS treats them as a pension plan and they require that the employee have a severance from employment. Thus, as applied to those types of provisions, the plan risks disqualification because there is no determination of whether the participant had a severance from employment. Is the IRS view on these deemed termination of employment provisions less restrictive in the collective bargaining context or should the deemed termination of employment provision in a money purchase plan be read as also requiring an actual severance from employment? Does anyone have any legal authority to cite for such a proposition?

A client has a defined benefit plan with 390 participants (all term vesteds, retirees and beneficiaries) and slightly under $2 million in assets. The plan would like to issue an RFP to solicit bids for a single premium group annuity contract for all of the plan's participants. Does anyone have an RFP they could share as a template for creating such a document?

Actually, this appears to be on all fours with what I am confronting, albeit in a different state. According to a colleague, most organizations operating an apprenticeship training program are established as 501(c)(3) organizations, from what he has seen. The trust assets are being used exclusively to provide for the apprenticeship training program and not to pay benefits to individual members.

A client with a VEBA had its exemption automatically revoked for failure to file 990s for three consecutive years. Seeking retroactive reinstatement of the exemption. According to Rev. Proc. 2014-11, the IRS will not assess failure to file penalties against the organization if IRS grants the organization's request for retroactive reinstatement. What if the IRS does not accept the argument raised in the reasonable cause statement, in which case reinstatement would not become effective until the date the reinstatement submission was mailed? Would the IRS assess failure to file penalties for the period between the revocation date and the mailing date of the reinstatement filing? Did anyone have this happen in a real-live situation with respect to a client where the IRS rejected the reasonable cause statement and assessed failure to file penalties for the period that the VEBA remained non-exempt?

With the Social Security Administration announcing its COLAs on the taxable wage base as well as the increased Social Security retirement benefit, the IRS now has all the information it needs to be able to announce the 2020 dollar amounts as indexed for the cost of living. Any indication of when this will happen?

It may be that the employer classified you and others as independent contractors. Were you issued W-2s or 1099-MISCs? If you were in fact an employee, there are all kinds of tax reporting and withholding rquirements which were violated and are subject to substantial tax penalties. You should also notify the IRS.