RatherBeGolfing

For your spreadsheet, are you allowing a full years delay of each payment before it is re-amortized, or are you re-amortizing the entire delayed amount when the first delayed payment reaches a year?

The 1099 for loan offset is the same as any other distribution. The 1099 for a deemed distribution without an offset uses code L in addition to 1,2, or 7. That signals that it is not rollover eligible. So, if my interpretation is correct, I believe the 1099 would prevent the employee from treating it as a CRD for tax purposes.

Agreed. The employee would only need to certify that he/she is a qualified individual for the purpose of a CRD as a distributable event. Other than that, it would be handled on the employees tax return.

100% agree new loan or old loan doesn't matter. I'm saying the payment you want to delay has to have a due date that occurs during the suspension period (3/27/20-12/31/20). If you are on year three of a loan and you didnt make your 2/28/20 payment, I'm not sure I see that the language supports delaying that payment. Is the due date of a loan payment its scheduled payment date or the cure date?

I think it comes down to whether a deemed distribution is in fact a distribution, or just a taxable event. An offset is clearly a distribution, one that could even be rolled over, so that is a CRD if all other requirements are met. EDIT: Im going to send this one to Derrin to see if he can include it it on his "Fireside chat" webcast next week...

Agreed Agreed Agreed My reading of 2202(b)(2)(A) is that the due date of the payment (per the amortization schedule) would need to fall during the suspension period. I wouldn't count the cure period as a "due date" that could be extended. It can probably be argued the other way as well, but that is how Im looking at it for now.

Luke, The same language in KETRA has been interpreted as optional due to language in Notice 2005-92. Notice 2005-92 also included a safe harbor method for delayed repayments katrina_act_text.pdf not200592.113005.end.pdf

I agree. Compound interest is more appropriate, and something that most admin software or spreadsheet will take care of.

No. Any distribution in 2020 is a CRD if made from an eligible plan to a qualified individual, including the RMD you describe. In your example, it is a 2020 distribution from a 401(k) plan, correct? In that case, it is a CRD if the participant is a qualified individual, and can be paid back to any plan or IRA that accepts rollover contributions. If the original plan accepts rollovers, it can go back to that plan. Since it is terminating, it is possible that it will not accept a rollover. Short answer is that RMDs are waived for all plans (except defined benefit plans) for 2020. It is simply not required by law. You do not have to be a qualified individual or be affected by the virus in any way. The longer answer is that some plans may still require a distribution based on the plan document language, even if it is not required by law for 2020. These plans will be the minority though, so chances are that your plan will not require an RMD.

Yes. We are having issues with several recordkeepers processing CRDs. Its understandable since they had to develop procedures on the fly, but it is frustrating...

They sell "401(k) leads" to financial advisors. They collect the data, package it in a report, and sell it as a lead. Im sure they do some sort of review so they can say they provided a service, but their game is selling access to the plan.

I have used 23rd, but... I think it is the 22nd. The 23rd would be day 181

@Dave Baker Including a notification to Dave for this thread. I don't think it is necessarily inappropriate for a participant to come here to ask questions. Many have simple questions and just don't know who to ask or where to turn for information. I agree that it is inappropriate to try to resolve specific participant issues or lay blame on someone through the message boards. We never have all the information, and we only get one side of the problem. To that end, maybe just have Mods lock a specific thread when it gets combative and insulting, rather than not allowing questions from non-industry folks all together?

I believe they are closed down. This is one of the reasons ARA is fighting hard for the automatic extension for all plans, the service center that receives and processes the 5558 is shut down. If you really need to file, I would file it electronically on the SF with limited information as a one participant plan.

Unless I'm missing it @Peter Gulia is actually mixing his apples and oranges in the hypo. If it's a participant directed plan, and Pat takes 100% of his balance as loan, the only thing left in the plan for Pat is his loan receivable of $100,000 plus interest. There is nothing to decrease in value due to market swings. If the loan is a PLAN investment, it is a whole other animal. If you let a participant borrow 100% (let's say $100,000) and participant is laid off/defaults with a market loss that that now values his account at $75,000, the plan has a loss of $25,000 on that investment after participants account balance is used to offset. If loans are plan investments, I would heavily favor CRDs over CRLs in this economy. Let them take their balance out and pay taxes or repay over the next 3 years rather than an iffy plan investment in participants ability to repay the loan.

https://content.govdelivery.com/accounts/USPBGC/bulletins/285ef9c Follow up from PBGC

100% this.

@Ian what is it that you are trying to achieve / what is the reason for your question? Are you in the retirement industry, or are you an affected party? The answer to your question is not going to be a simple yes or no, so it will help to know how the answer the question

@EBECatty Agreed. It has also been very helpful when looking at the loan provisions. There is also a bit of a conflict between plan and individual treatment of distributions. The plan can treat a distribution to a qualified individual as a CRD, unless the aggregate distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000. The Individual on the other hand, can designate any distribution as a CRD as long as the total amount does not exceed $100,000. So if I take $50,000 from my IRA (and intend to designate is as a CRD) and $100,000 from my 401(k), I can only designate $50,000 from the plan as a CRD. The plan can treat the entire $100,000 as a CRD. Should the plan's default be to treat any distribution to a qualified individual as a CRD as long as it does not exceed $100,000, or should the plan leave it up to the participant to tell the plan if less than 100% of the distribution should be treated as a CRD, and treat the remainder as normal distribution?

"any and all" is one of those old legal doublets they teach you not to use anymore. They usually mean the same or close to the same, and they want you to use the most appropriate single word instead. I'd say any refers to an unknown number. It could be one, a subset, or all. All refers to... all, or every one. If the intent was to define all repayments, they would have used all rather than any.

It says if the due date for a payment occurs between enactment and December 31, 2020, such due date shall be delayed for a year. The language is very clear. Nowhere does it say say you have until December 31 to delay Really? Where do you see "all"? Where do you see "one year delay"?

missed that part :)

Then (A) is pointless, and that is just not how statutes are drafted

That is how IRS interpreted KETRA...

JH CARES - withdrawal form.pdf John Hancock CRD form