RatherBeGolfing

We have a handful, all "elective procedure" type of practices who had to shut down. The last one dragged their feet but finally allowed it, and the flood gates have opened....

I wouldn't be surprised if they looked for it as a part of a larger PPP abuse initiative rather than a qualified plan issue

Id say qualified individual without hesitation.

I'll second Erisapedia, they put on lots of good free webinars. You should be able to get at least half of your CPE from them in a given year.

Yep HR 7010 passed Senate. If you want to talk fairness, why should taxpayers pay for an employer to sit on free cash while the employees cant pay their bills? I get the argument, but the forgiveness part wasn't intended to just benefit the employer. It was meant to keep paychecks flowing while the country was shutting down in a panic. The 8 weeks was too narrow, there is no doubt about that. Especially since the first wave of PPP loans was essentially over by the time we had some decent guidance. But even businesses that did keep payroll going had a hard time spending the bulk on payroll, so an extended window makes sense. Dont get me wrong, I dont oppose the fixes and extensions in the bill. I just dont care for the argument that an employer couldn't spend it on payroll while they were closed, when the intent was never to let employers sit on Payroll Protection cash until they could get a windfall from it.

It was never about fairness though. Different circumstances yield different outcomes. I wish it could have been more restrictive to prevent employers from just getting a windfall. At the same time, the employers did assume some risk since there were so many unknowns. Could it have been restricted to help only those who fit a narrow set of circumstances? Sure, but we would still be reviewing applications from March. My point is that if they miss out on forgiveness because they sat on the cash hoping to spend it when they opened up again, thats on them. The loan part made cash available for employers. While the forgiveness part has not been clear, we have known for months that if you don't spend on payroll, even if you paying your employees to pick their bellybutton and watch Netflix, you will lose out on forgiveness. It was up to the employer to decide what was more important, the loan or the forgiveness.

They could (and should) have paid their employees while they were closed.

Yes Yes The distributed amount is included as income in 2020 or over 3 years. If the withholding exceeds taxes due, it could be refunded or carried forward to the next year.

Right, thats an easy NO. The loan itself has to be limited to 5 years (except for a principal residence loan). The delay of repayment is a separate issue. You would have to issue the loan at 60 months, immediately suspend loan payments until [date pending guidance], and then extend the loan repayment period by [pending guidance]. In the end it may be 72 months, but more likely 67 months if the loan was issued today.

Thanks Luke. I'm still not sure how you square it with the requirements under CARES, and the special advantages it provides. For example, as a qualified individual, I take a distribution of 1,000 shares of Stock A at $70 per share. Stock A has taken significant losses during the first couple of months of Covid lockdowns. I get a 1099-R for $70,000 which is less than the $100,000 aggregate limit under CARES. In 2022, Stock A has benefited from global recovery efforts and has bounced back to $105 per share. I never sold the stock, and would now like to take advantage of the repayment provision in CARES, so I contribute the identical 1,000 shares to my IRA. The value of the shares at contribution is $105,000, which exceeds both the general aggregate dollar limitation of $100,000, and the requirement that "1 or more contributions in an aggregate amount not to exceed the amount of such distribution". 2202(a)(3)(A) I know you are arguing that "amount" should not be limited to just a dollar amount, but for tax purposes a dollar amount has to be assigned to both distribution and contribution, no? You need to get a 1099 for the distribution, and any amount included in year 1 and 2 would be credited when repaid in year 3. I guess Im still struggling with applying the general rule to the requirements in CARES.

Luke , you would still be limited to value at distribution though, right? If I distribute 1,000 shares at $70/share today, I cannot contribute 1,000 shares at $100/share next week.

No. How are you getting the CRD into the Roth IRA without a repayment/contribution? Put different accounts, rollovers, and conversions aside for a minute and make it super simple. $100K can move FROM your 401(k) or IRA once (the distribution). $100K can be repaid/contributed once (the contribution into the IRA). Thats it. You moved money out and you moved money in. For CARES purposes you done.

Luke, I'll concede that the statutory language does not seem to prohibit a pre-tax CRD from being repaid to a Roth IRA. I disagree with the assertion that it consistent with the spirit of the statute. The spirit of the law is that unless you repay over three years, you include the the CRD as income over three years. As I see it, the use of Form 8915 backs that up (assuming that Form 8915-E will not have some new feature). The 8915 seems clear that the amount NOT repaid is included in income, and any excess repaid in a carries forward or is refunded. Ive seen plenty of people on the investment side urge caution on the issue absent guidance, and I think that is the most sensible thing to do at this point. We know the IRS will issue more guidance, so hopefully they will help clear it up. Id be curious to hear what @Appleby has to say on this issue...

He is getting the most basic elements very wrong. You have to consider aggregate distributions and repayments, they don't cancel each other out. The limit is $100k. You cant repay $100k twice. To put it in very simple terms, if I withdraw $100k today and put it back tomorrow, then withdraw $100k again next week, the second $100k cannot be repaid and has to be included as income in 2020. If he "repaid" the CRD into a Roth (assuming that is permissible), he can't also repay it to the 401(k).

I would actually argue that it would be the opposite. The Roth conversion isn't a repayment, its another transaction triggering another taxable event. If they meant for the rule to include as backdoor Roth conversion with three years to include the amount in taxes, there would be some way to account for it, and there isn't. Repayment negates inclusion of that amount in income, and repayment of an amount already included triggers a refund.

Luke, the 8915 is pretty simple. You elect to include as income in year 1 or spread over years 1-3. If spread over years 1-3 and you repay less than 1/3, include difference in income. If you repay more than 1/3, excess can carry forward to year 2. In year 2, if you repay less than 1/3 (including any excess from year 1), include difference in income. If you repay more than 1/3, it can carry back to year 1 or forward to year 3. If you included any of the distribution in income in year 1, and repaid an excess in a subsequent year, you file for a refund. There is no option to repay and still recognize as income. Its either income or repaid. CARES and 8915 both address repayment or include in income. that to me suggests an apples for apples distribution and repayment.

The preamble touches on it without going into detail on page 31889

I agree, but I think that if you require an email for some form of HR or safety notice that is regularly occurring and not just ad hoc, you should be ok. It is an area where you need to be careful though. I have some clients where this simply would not fly because most of the participants do not understand computers, internet, and email well enough.

Peter, I think thats enough. The compromise from the proposed rule's provision that you could assign an email just for disclosures is that you can use an employer assigned email as long as it has at least some other purpose. As long as it fills some other function as well, you are ok. It is not enough if applied to @shERPA separate server for terminees example though, which requires a private electronic address.

Yes. Its a no go.

Its not a new form though, the only expected changes are the applicable years

Im not so sure about that. Distributions and repayments have to be reported on Form 8915. That is how you determine the taxable portion of the distribution and whether you receive a tax credit to carry back or forward due to payments already made. From what I have seen, there is no place to indicate that the repayment was made to a Roth IRA to negate the fact that a repayment lowers the amount included in income. Im not sure that the discrepancy here requires human review.

Lol. No worries Austin. FWIW, I have been involved in the back and forth with DOL on this issue for many years, and it has taken a lot to get them to move this far.

You are mixing apples and oranges. Your have an obligation to provide the participant with certain documents. You can always provide the documents on paper by mailing them. The DOL is giving you three outs to provide them electronically with a safe harbor. 1. Get participant consent to electronic delivery 2. Default to electronic delivery. The website delivers the communication. delivering the NOIA is just one of the requirements. You do not have an option of sending the NOIA on paper if the actual document has to be accessed electronically. 3. Default to electronic delivery of the communication itself. If you cant/wont do one of the three, you dont get the safe harbor.

Gotcha. Thats an unequivocal NO. First, the safe harbor requires that it is sent electronically after the initial notice. Second, for terminee's the safe harbor requires that you have a personal electronic address. If you fail to request and receive one upon termination (unless the employee has already provided one), the terminee in NOT a covered individual, and the safe harbor does not apply. Third, for reasons stated earlier in this thread, requiring the participant to do more work to accesss disclosures and miss out on the instant notification and on the go availability of the notice is a non starter. Its not, but you can follow most of the steps and email the documents directly under the safe harbor. The hoops and hurdles are to obtain the luxury of not needing participant consent to electronic communication/notification. The biggest issue with your approach is that you want to take the electronic notice out of the equation, which is really the foundation the DOL crafted the rule on. You can default to electronic disclosure because the participant has indicated that they are willing to communicate directly by giving you an electronic address. You have to monitor this electronic address, and if notifications bounce back or become deliverable, you can no longer assume that the participant is willing or able to access communications electronically, and can therefore not rely on the safe harbor. DOL may be ok with your method (without participant consent, I highly doubt it) , but it does not get the reliance of safe harbor.