RatherBeGolfing

In this example, the $100k is a corporate asset until contributed as $105k right?

At the time, I think there was also immense pressure on providers to offer a way to utilize the relief in CARES.

The funny thing is that incorrect usage of certain words or phrases can become so common that they are accepted as alternative. I don't know how common it is for schools to offer formal logic anymore, but it was one of the best courses I took as an undergrad.

just a guess on my part, but the lower you get in cost/fees, you are also likely to get less flexibility for something like this.

FYI The "return" date has been extended to 5/14. Also hearing that banks are contacting loan recipients of less than $2,000,000, asking them if they are completely sure that they need the loan, which is adding fuel to the fire.

Yea I know what you are referring to, but I dont know if denying an employee certification and refusing to qualify a DRO are really comparable. I see where you are coming from though

Point taken.

Did anything really change though? Did the law actually have to state that you cannot rely on a statement you know to be false? Maybe Derrin will talk about the Q&A in an hour...

FWIW, I think every form I have seen just lists the requirements for a qualified individual, and then has the participant certify that he or she is a certified individual. I do not believe I have seen one that requires the participant to certify which requirement they actually meet.

I wouldnt say impossible, but it's rare. Even if we increase the odds of having actual knowledge to the contrary, nothing in the IRS Q&A states or implies a duty to question or verify. Unless you know they are lying when they make the statement, you dont have actual knowledge to the contrary and you may rely on participant certification. Dont ask dont tell works fine for CRDs

The majority of my clients have not adopted CRDs or CRLs. Those that did were affected to some degree, from business slowing down to being shut down completely.

$100k contribution, $100k deduction, $5K gains/earning. Otherwise, it would have to be held in suspense, and think we have agreed that is improper right?

We will have to agree to disagree. In 99% of cases, I just don't think the sponsor will have actual knowledge. Also, just because sponsor may rely on participant certification, it doesn't prevent them from verifying the claim if they really think the participant is lying.

The safe harbor did not use different amounts once restarted and then a higher amount once re-amortized, it re-amortized the full amount as of the restart. That is the easiest way to do it. You are not required to use the safe harbor. I don't expect guidance to be too different from 2005-92. The dates/periods are different, and they may be creative there, but most people who argue for "no payments at all for a year" are using the "any subsequent repayment" language to say that you move those payments along with the suspended payments. That was not the interpretation of the same language in 2005, so I doubt they will say it meant X then, but it means Y now.

Im with MoJo on this one. You have a pooled plan, you deposit $100k on January 1, 2020. It is a contribution for 2020, it is allocated for 2020, it is invested according to trustee direction when it hits the account. Just because we don't have a valuation (per the plans formula) that says $3K to Joe, $20k to Sally, etc, doesn't mean that we dont have $100k allocated for 2020. That is very different from a participant directed plan with "holding account" where they park contributions until they figure out who gets what. Unless the plan document is drafted very specifically, you have a problem either way you twist and turn it. If it is allocated when it hits the holding account, then you have failed to properly invest the contribution for each participant once the valuation tells you that Joe gets $3k and Sally gets $20k. If it is unallocated, then you have the problem of an unallocated account. If you want to make deposits as you go to make sure you don't spend it, open a separate corporate account to hold cash until you are ready to make a contribution. You don't get the benefit of shielding the cash from creditors by putting it in an unallocated plan account. We have one PITA plan that insists on funding during the year, and we make them contribute directly to the participant accounts, knowing that once the contribution hits the account it is allocated and cannot come back out. It requires ongoing calculations throughout the year, and the all but guarantees that a maximum contribution will be made.

You are correct that spouse being laid off does not qualify. I would be very surprised if the IRS didnt add that when they issue guidance though. That said, you are reading way too much into what the "Administrstor must know". An employee could have a second job, so the admin would only know that hours had not been reduced with the employer. Another employer still qualifies. I'll double down on "you don't know what you dont know". Just because the employer has not been notified that the employee or employees spouse/dependent has been diagnosed, does NOT mean that the employer had actual knowledge that a diagnosis has not been made. Actual knowledge to the contrary is like knowing the employees house didnt burn down because he lives in your spare bedroom.

No, I cant get there based on the Q&A. It just means you cannot accept a statement you know to be false. Actual knowledge to the contrary doesnt imply a duty to confirm. Absence of a notification that an employee has been diagnosed (or spouse or dependent) isnt the same as as actual knowledge that there has not been a diagnosis, nor does it mean that you have to confirm/verify the diagnosis since you haven't been notified. You might want to verify for other reasons, but you are not required to for the distribution.

Those who haven't been following also need to know that this is one way to interpret the statutory language, it is not the only way. If you talk to the folks who work with policy at recordkeepers and industry associations, this is not how most interpret the statutory language. It is also important to point out that for an agency like IRS or DOL, the starting point for developing current guidance is to look at past guidance. Could we get something that is different from past guidance? Of course, but it is probably a good bet that most of it will be substantially similar to past guidance. In that context, even if new guidance said " suspend all loan payments for 12 months", they will probably still allow plans to adopt shorter delays, like they did in 2005-92. So for those who are being notified by the plan or recordkeeper that payments will be delayed until January 2021, they are probably not wrong.

Luke, in your example, I don't think you have to restart on 1/1/2021. Scheduled loan payments would restart on 1/1/2021, but you don't have any payments scheduled for Jan 2021. Your first loan payment of 2021 would be your first delayed loan payment. So lets assume you suspended monthly payments starting with the 3/31/2020 payment. Your first payment would be 3/31/2021. The statute does not say "no loan payments for one year", it says "these loan payments are delayed for a year". Restarting regular scheduled payments as of 1/1/2021, and restarting the delayed payments after one year of suspension, is consistent with the statutory language.

Its been a while since I have done one, but you can do one Form 5330. Use 2020 Form 5330 On description of PT put something like "late deposit of employee contributions - see attached summary. Noe: Value in column (d) is cumulative for 2017-2020" Attach a summary for all years.

IRC 152

I agree. The death of the dependent does not undo the qualifying event, which was diagnosis.

I should clarify by saying that you don't need a specific reason for the loan, but you do need something to make you a qualified individual if you are going to take a CRL. You could take a regular loan, but unless you are a qualified individual you will not get the increased limit or delay of repayment. If the father i a dependent, the "qualifying event" is that the father has been "diagnosed with the virus SARS– CoV–2 or with coronavirus disease 2019 (COVID– 19)" under 4(A)(ii)(II). The funeral itself does not make an otherwise non qualified individual a qualified individual.

Agree with RBR, the rules are clear. Funeral doesn't qualify. No "other factors" have been added at this point.

Not finding it, but I'm limited to 2001-2018