Belgarath

One of our CPA contacts, for a client NOT located in Arizona, but in Northeastern US., received this form from the Arizona Department of Revenue. We don't administer the plan, but the CPA had never seen such a form, and asked if we knew anything about it. I certainly don't. The plan in question is a Union, and it is a defined benefit plan. Anyway, the form is for a "TPT License" - and says that penalties will apply if you haven't paid. We told the CPA we knew nothing about it, but for my own information, do any of you out in the Southwest (or anywhere else, for that matter) know anything about this? Is this a "normal" thing that actually applies to a defined benefit or other qualified plan in Arizona, perhaps similar to the (often ignored) loan document fee in Florida?

Austin - I have to say I agree with the previous posters. While I grant that a very small employer would generally "know" that most of these statements were PROBABLY not applicable, there are certainly circumstances where you might THINK you "know" when you really don't. For example, suppose your business partner was diagnosed with Covid, but did NOT disclose this to you? I realize this raises other serious issues, but for purposes of the certification, you don't KNOW. Another situation that comes to mind is a dependent. "Your spouse or dependent is diagnosed with SARS-CoV-2 or with COVID-19 by a test approved by the Centers for Disease Control and Prevention;" - again, MAYBE their spouse got diagnosed and they have not told you, for fear of adverse consequences such as being forced to stay at home and miss work. MAYBE they have a dependent that you don't know about - a child from an illicit affair, etc., etc... I suppose I can see your point, if an active employee sends you an e-mail and says, "I want a Covid distribution because I've been laid off" and the employee is still working for you every day, then yes, in such a situation, I'd refuse to accept a self-certification. But other than a completely ridiculous situation like that, I feel very confident that the Plan Administrator is allowed to accept self-certification without a second thought.

Thank you! I had never seen this. In fact, I already used this approach on another plan just last week, but in that plan, the recission was PRIOR to the effective date of the amendment that removed the safe harbor. I'm not aware of any guidance allowing you to amend back in to safe harbor status during the same year when you already amended out, if you have passed the effective date of the original amendment. I already told 'em no can do, but if there is any other official guidance permitting it, I'm perfectly willing to feast upon some crow.

FWIW, you do have a short limitation year if the plan is terminated on a date other than the last day of the plan's limitation year. 1.415(j)-1(d)(3).

I understand these points, but they specifically asked this question. Yes, I can advise them on alternatives, good choices and bad choices, but I did want to make sure I hadn't missed anything. I had already thought about BG's solution as a solution that accomplishes what they are really trying to do, although I was thinking about a discretionary match instead - that way, they wouldn't have to amend out again - just stop matching. Anyway, thanks for the responses.

So, a Safe Harbor 401(k) plan amended out of Safe Harbor (match) a couple of weeks ago. Now they got a PPP loan and want to amend back in, for the next 8 weeks, then will probably want to amend out again. I say no, but this stuff has been changing so fast that I wanted to make sure I haven't missed anything.

Curious as to how this is handled in most plans - specifically, tax exempt plans with no Rabbi trust. Some plans allow participants to direct "their' account (although of course it is employer money) and others don't. When it comes time for the participant to elect a distribution, and they choose "substantially equal" monthly installments, do the plans you see: A. Take the account balance at the time of distribution, divide by the number of months, and pay a fixed payment - interest or losses on the funds absorbed by the employer. B. Still allow the participant to have investment control, and the "substantially equal" payments can fluctuate with the underlying market value? C. Other? I've only seen "A" but I don't see many 457 plans.

Thanks Larry!

If a plan allows rollovers from "401(a)" plans, does this include a governmental TSP? I know TSP distributions CAN be rolled to IRA's, qualified plans, etc., but does a TSP specifically need to be listed under the plan types that can be rolled in, or is that covered under the umbrella of 401(a)? P.S. - it seemed to me that it does constitute a "qualified trust" under 401(a) - also see paragraph (5)(G) of 401(a) which specifically exempts governmental plans from paragraphs (3) and (4). It just isn't entirely clear to me, so I thought I'd check to see who else might have considered this issue.

"I suggest the employer help set up payroll deduction IRAs with their own bank for any new employee who wants to defer before the one year eligibility is met. There is a rule that if an employer has reason to believe that the IRA contribution will be deductible for the employee, he doesn't have to subject that amount to withholding so it operates much like 401(k) deferrals. Most new employees won't go over the IRA cap anyway." Larry, that's very interesting indeed. Do you know, offhand, a citation for that? Please don't take any time, I can dig around when I have a chance.

Since I have virtually no information to go on, this question may not make any sense. A governmental employer who has a "deferred compensation" plan - I'm guessing a 457(b)??? is apparently either changing or terminating the plan, whatever the plan is. We got a call out of the blue asking how they notify the IRS that the TIN will be "inactive." I don't work with governmental 457 plans, or any other governmental "deferred compensation" plans for that matter, if there are such things. Does anyone have any idea if there is a required notification to the IRS of such a TIN becoming inactive? I believe if a corporation terminates/dissolves there is a notification process involving the corporate EIN, but that's a different matter. Thanks in advance, if you know anything about this.

Thank you both. That's what I was coming up with as well, and yet I felt foolish because I wasn't finding the "black and white" either.

I'm embarrassed to even be asking this question, but I've managed to twist myself around on a very simple question. Profit sharing plan, forfeitures can pay expenses or be used to reduce employer's contribution. Forfeitures are NOT reallocated. Participant terminates in 2020, receives full distribution, so forfeiture occurs during 2020, for the 2020 plan year. Can this forfeiture be used to reduce the 2019 plan year profit sharing contribution deposit that is made in 2020? Looking out at the snow blowing by the window is freezing my brain.

I'll second Dave's comment. I was extremely fortunate to have an outstanding mentor, who was generous with his time and expertise above and beyond the call of duty. I doubt that I'd have stayed in this business if it weren't for him.

Just be very careful you don't forget your OWN anniversary, or you might find yourself reading up on QDRO's...?

"I know I am getting sick of my cat climbing on the keyboard and pressing random keys." Too funny. I was in the midst of sending my boss an e-mail when the cat tromped across the keyboard, and I sent an e-mail of mostly gibberish. Probably a new acronym is about to be invented, like PIE (pet induced error) or something like that.

Ah. Thanks Lois. I hadn't seen this yet. Slipped under my radar, somehow. These boards are great!!

Unless there has been a recent change that I missed, this deadline was NOT extended.

Hi Tom! We miss you! I hope you and family/friends are happy and (especially) healthy, and that you are enjoying your retirement. I get the feeling that many of us on these boards are "old timers" who will be retiring in the next few years, so if retirement stinks, please don't burst my bubble by saying so... Best wishes.

Following up on this now that the dust has settled a LITTLE bit - at this point, what happens if employees are furloughed, and have a health FSA. Or better yet, they were working full-time, and have been dropped to 1 day per week. By any reasonable standard, you'd think that this is an allowable "change in status" that would allow them to make a new election, but I'm not sure, in the absence of additional guidance, that it qualifies. Seems overly harsh to have to continue to withhold the FSA funds when your income has just dropped by 80%. I know relief for this any many other situations is being discussed, but I haven't heard anything concrete. Thoughts?

That's up to you. I would just tell them that yes, payments for qualifying individuals will be delayed under the CARES Act; yes, interest will accrue for the period that the loan payments are delayed; and that additional IRS guidance is necessary (and expected) to determine exactly how the interest/reamortization schedule will be recalculated once repayments must begin.

Good grief! Since the practical effects won't take place for quite some time, I'm not going to take a lot of time, at this point, worrying about those details. I'm quite sure the IRS will address this in the months to come, and I'll wait to see what they say. If there's no guidance forthcoming within a reasonable amount of time, then I'll worry!

So the legislation doesn't count a participant as an "eligible" participant if the participant's SPOUSE gets laid off due to Covid-related employer financial issues at the spouse's employer. I'm guessing the odds are that Treasury will add this situation to the list of "other factors" to be determined? Anyone heard anything on this? I'd rather expect that there will unfortunately be a huge number of such situations.

I think under 2520.104b-3(a), the REQUIREMENT is no later than 210 days AFTER the close of the Plan Year IN WHICH the modification or change was adopted. Now, I've seen some interpretations that the change isn't "adopted" until the plan is formally amended, which in situations like this means potentially a long way into the future. So I think at the very least, you don't need to do it prior to allowing these options.

From TAG - any thoughts? It would be permissible to allow coronavirus‐related distributions from a pension plan, however, in order for a qualified individual to be eligible to receive such a distribution, they would either have to have terminated employment or attained age 59 ½. The CARES Act did not provide an exception to the age 59 ½ age requirement under IRC §401(a)(36) for in‐service distributions from pension plans.