RatherBeGolfing

We are taking the same position. The waters can be a bit muddy when it comes to laid off or furloughed though.

We used to use Relius and Logmein as well. The problem we had with that was, that an issue with the Relius server or the computer you are logged into would need to be addressed on site. This sometimes caused issues on evenings, weekends, or extended periods of remote work when we didnt have staff in the office. We left over 10 years ago, and I didnt think the on site Relius software would last this long...

There are plenty of intelligent responses, but we dont have all the facts we need for a complete answer. Like most threads, it's a give and take between the OP and the people who respond. Of course. No one is blaming Fidelity. We dont even know that Fidelity had their attorneys involved, it could an administrative mistake. Not really. Like many posts here, the OP doesn't necessarily know what facts to look for or what questions to ask to get those facts. Most of the back and forth in these threads is part of the process to get the facts. This thread has gotten more facts from OP. It has provided OP with direction to get more facts relevant to the situation, like what Fidelity's role was. It has informed OP that the wife needs to submit a claim, and probably needs legal representation from someone who specializes in this part of the law. I'm all for case law, statutes, and regs. But if we don't have the full picture, how can we provide OP sources that are relevant? Your conclusion from Kennedy seems to be that since a divorce decree waiving a benefit does not automatically void a beneficiary designation filed with the plan, a participants subsequent marriage shouldn't automatically void a beneficiary designation either. This is incorrect. The problem is that if the plan is exempt from the QJSA requirements (which OPs fact pattern suggests), the spouse is required to be 100% beneficiary unless he/she waives that benefit. The marriage supercedes the prior beneficiary designation. It is no longer valid. If the plan pays out a benefit based on the beneficiary designation that preceded the marriage, it is NOT acting according to the terms of the plan, which is a crucial element in Kennedy.

I think we all agree that more facts are needed, my point was that we don't have competing provisions or two people with a valid claim. These things happen because: 1) someone screwed up 2) someone lied 3) 1&2 Who screwed up or lied is anyone's guess at this point

This is missing @Bird's point. The present case is not dealing with two competing ERISA provisions, the designation of the son as the beneficiary became invalid when the father remarried.

Agree with ratherbereading, but I would also add that if $2,700 is this big of a concern you should be looking for a different vendor. Relius has a great product, but there are other great products out there for a lower fee. I would consider paying the $2,700 to do what you need to do now, then switching to a different provider at the end of your next contract cycle. The savings in the first year should cover the $2,700 extra you pay to Relius now.

And diagnosis is just one out of four right? There is: Diagnosis Spouse diagnosis Adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or Other factors as determined by the Treasury Secretary I think there is a lot of room under #3 for most people

Senate Takes Up Coronavirus Stimulus Bill with Retirement Relief BY TED GODBOUT MARCH 25, 2020 LEGISLATION After five days of intense negotiations, the Senate was set to vote Wednesday on an unprecedented $2 trillion stimulus bill covering every aspect of the U.S. economy, including retirement relief provisions supported by the American Retirement Association. Earlier today (March 25), the Senate leadership released the final Coronavirus, Aid, Relief and Economic Security (CARES) Act (H.R. 748 as amended), as negotiated by Senate Republicans and Democrats and the Trump administration. Once the legislation is approved by the Senate—which is expected—the legislation will move to the House of Representatives, where it may also be approved today under “unanimous consent,” though it could be held up if a member objects to that approval process. Assuming it is approved, the bill would be sent to the the White House for President Trump's signature; Treasury Secretary Steve Mnuchin has previusly indicated that President Trump would sign the bill. As for the retirement-based provisions, the final bill sticks closely to what was initially proposed by Senate Majority Leader Mitch McConnell (R-KY), including provisions to ease retirement plan hardship and loan rules to free up funds for individuals impacted by the pandemic and to provide relief from the required minimum distribution (RMD) rules. The final bill also adds funding relief for single-employer defined benefit plans. Below are the key provisions affecting retirement plans. Hardship Distributions (Section 2202): The CARES Act waives the 10% early withdrawal penalty tax under Internal Revenue Code Section 72(t) on early withdrawals up to $100,000 from a retirement plan or IRA for an individual who: is diagnosed with COVID-19; whose spouse or dependent is diagnosed with COVID-19; who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or other factors as determined by the Treasury Secretary. The legislation also permits those individuals to pay tax on the income from the distribution ratably over a three-year period and allows individuals to repay that amount tax-free back into the plan over the next three years. Those repayments would not be subject to the retirement plan contribution limits. Plan Loans (Section 2202): H.R. 748 also doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan. Individuals with an outstanding loan from their plan with a repayment due from the date of enactment of the CARES Act through Dec. 31, 2020, can delay their loan repayment(s) for up to one year. Plan Amendments (Section 2202): The legislation further permits retirement plans to adopt these rules immediately, even if the plan does not currently allow for hardship distributions or loans, provided the plan is amended on or before the last day of the first plan year beginning on or after Jan. 1, 2020, or later if prescribed by the Treasury Secretary. Temporary Waiver of Required Minimum Distribution Rules (Section 2203): H.R. 748 waives RMDs for calendar year 2020 for DC plans, including 401(k), 403(b), 457(b) and IRA plans, allowing individuals to keep funds in their retirement plans. Under current law, individuals generally at age 72 must take an RMD from their DC plans and IRAs. The legislation also includes special rules regarding the waiver period to, in essence, hold harmless those individuals (and plans) who took advantage of the RMD waiver for 2020. Single-employer DB Plan Funding Rules (Section 3608): New to the bill is a provision to provide single-employer defined benefit plan funding relief by giving companies more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until Jan. 1, 2021. At that time, contributions due earlier would be due with interest. The provision also provides that a plan’s status for benefit restrictions as of Dec. 31, 2019 will apply throughout 2020, such that a plan sponsor may elect to treat the plan’s adjusted funding target attainment percentage for the last plan year ending before Jan. 1, 2020, as the adjusted funding target attainment percentage for plan years which include calendar year 2020. Expansion of DOL Authority to Postpone Certain Deadlines (Section 3607): The legislation provides the Department of Labor with expanded authority to postpone certain deadlines under ERISA. In general, the legislation increases the circumstances to go beyond a terroristic or military action to also include a public health emergency declared by the Secretary of Health and Human Services under the Public Health Service Act. ARA Presses for DC Funding Relief In a March 16 letter to the DOL and Treasury Department, the ARA pressed the agencies to provide relief from various filing requirements, including an automatic extension of the Form 5500 series for retirement plans, an extension to the deadline for correcting a failed ADP or ACP test and an extension of the period for distributing excess contributions and excess aggregate contributions under a plan, among others. Moving beyond the CARES Act, the ARA continues to push for additional assistance, including defined contribution funding relief. Most recently, the ARA called on the Treasury Department to provide relief to help employers facing significant financial burdens relating to the Coronavirus, especially for retirement plans sponsored by small businesses. “The financial crisis facing employers might force them to terminate their plans rather than keeping them intact, but partially frozen, until the business recovers,” the ARA warned in a March 24 letter to Carol Weiser, Benefits Tax Counsel with the Department of Treasury. What’s Next? We will post updates once the Senate votes—first on cloture, a procedure for ending debate, which would require the support of 60 senators, and then on the bill itself, which would only require a majority vote. We’ll post updates on those votes as things progress—so please stay tuned.

You would think so, but the IRS does not look at it that way. They seem to be taking a "we are not going to address it" stance at this point, so you can at least argue for them to be reasonable, but their stating position will be "no".

IRS has previously contended that unless "the act" under 7503 pertains to the determination, collection, or refund of taxes, the weekend or holiday extension has to be expressly granted in the applicable statutory provision. I believe the tax court has had a different opinion in at least one case, but it is still very much a gray area.

Just as an FYI, This is one issue where ARA is looking for legislative relief. ARA Crafts Proposal to Provide Retirement Plan Funding Relief for Small Businesses

There will be. IRS and DOL are both working hard on it. Contribution issues is part of what they are looking at. ARA is also lobbying for legislative relief, which can go beyond what the agencies can do.

Didn't the economic loss exception exist before the "maybe not" notice though? They just added the option of suspending with certain consequences if you included that in the SH notice. The real change made by SECURE is the ability to add SHNEC mid year rather than before the plan year started. In order to do that, they had to remove the notice requirement or there would always be a failure. Hopefully we can get some guidance if the IRS isn't dealing with disaster after disaster. Then again, the only time we would take advantage of not providing the notice would be if we had to put in a mid year SH. Safe harbor notices just don't take that much time and are often combined with other notices anyway.

https://www.asppa-net.org/news/ara-presses-retirement-plan-relief-coronavirus-stimulus-bill#.XnJuXbaftSs.link ARA Presses for Retirement Plan Relief in Coronavirus Stimulus Bill The American Retirement Association has been working with key lawmakers to include legislation that would provide tax relief to individuals and employers that suffer a sustained economic loss from the COVID-19 outbreak. The relief would be patterned after the disaster relief that was provided in the Further Consolidated Appropriations Act, 2020 (which contained the SECURE Act) and the 2008 economic recovery legislation. More specifically, the ARA has pressed for relief that would: waive the Section 72(t) additional 10% penalty tax on early withdrawals from retirement plans for individuals who have a principal residence in a declared health emergency area and suffered economic loss; permit individuals three years to repay distributions; increase retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in a plan (doubling current loan limits); allow individuals unable to repay loans to pay the income tax associated with a loan default over three years rather than all in the year of default; allow individuals who borrowed from their plan and have a repayment due to delay their loan repayment for up to a year; provide a wage credit for employee retention for employers impacted by the virus outbreak; provide an automatic 60-day extension of tax-filing deadlines; and provide a temporary waiver for 2020 RMDs from DC plans and IRAs. Considering the fast-changing health and economic situation concerning the COVID-19 outbreak, lawmakers appear set to consider a third, more expansive stimulus bill that includes retirement plan relief. Treasury Secretary Steven Mnuchin, who worked closely with congressional leaders on a second bill that is nearing approval, reportedly is working on an $850 billion stimulus package to present to Congress. This potential third bill is still in the discussion stage, with many ideas being floated from lawmakers in both the House and Senate and from both parties, including payroll tax relief, loan packages for small businesses and various other tax incentives for hard-hit industries. It may also include delay of tax deadlines and relief for student loan interest payments. A temporary cut in payroll taxes has, so far, been resisted by members from both parties but some type of relief seems to remain in the mix. It’s possible that the provisions pursued by ARA could be added to a bill currently under development. The ARA, in a March 16 letter to the Treasury and Labor departments, has also requested relief from various retirement plan filing deadlines under the Internal Revenue Code and ERISA due to the impact of the Coronavirus. What’s Next Phase one of this three-part series of bills was the March 6 approval of an $8.3 billion research and vaccine development funding bill to combat the Coronavirus. A second, amended bill approved by the House on March 16 and moving toward approval in the Senate addresses some of the health and economic-related aspects, including reimbursements for COVID-19 testing, an expansion of FMLA and unemployment insurance, and new emergency paid sick leave for employers with fewer than 500 employees, as well as tax credits for such emergency paid sick leave. Senate Majority Leader Mitch McConnell (R-KY) in a March 15 statement noted that the earlier legislation was only the beginning steps in providing relief and that he has spoken with the chairmen of the various senate committees about next steps, including: helping Americans overcome financial challenges in the weeks and months ahead; securing the nation’s economy, particularly for small businesses; and readying the health care system and supporting medical professionals. In response to McConnell’s statement, Sen. Charles Grassley (R-IA), who is Chairman of the Senate Finance Committee, stated that, “We are actively working on a phase three economic stimulus package, which should include help for everyday Americans, as well as small businesses and major industries, so they can keep their doors open and workers on the job.” “I’m currently looking at what we can do to relieve the strain on workers, the burdens on businesses small and large and the capacity deficits at rural hospitals,” Grassley noted, adding, “at this point, all options remain on the table.” Of course, the timing of this third bill is uncertain, as many House and Senate offices remain closed over concerns about spreading the virus. Additionally, the Capitol complex itself is currently closed to visitors. But the phones and email still work—and the ARA is pursuing all reasonable avenues to make this relief a reality.

IRS can only do so much under regulatory authority, other relief has to be legislative

I had one client do it last year. Several long tenured staff members retired, and the shareholders decided that a special valuation was warranted to credit them with significant earnings. Another client just adopted a policy that for 2020, a special valuation will be done as of the last day of the month when a distribution is requested, and that is what the distribution will be based on, whether up or down from the last valuation.

AICPA is expecting a relief announcement this week, and from what I understand the IRS has indicated that they will be lenient with "for cause" penalty forgiveness in areas with no formal relief. I know we have requested relief on the retirement side as well, but I'm not sure if they will address general tax relief and pension relief at the the same time.

I think we are dealing with two separate issues. 1) Can you do it (does the document allow for it) and 2) Should you do it Issue 1 is appropriate for you to answer as a non-fiduciary, I do not think issue 2 is. You can (and probably should) tell them about the availability and suggest that they review, and seek outside counsel if necessary, but I wouldn't go as far as recommending it.

Just curious, are you a fiduciary to the plan?

There is also a fourth way, known as the Larry way ? @Larry Starr

AICPA is expecting relief announcement from IRS this week. I'm not sure if we will get plan related relief as well or if that will come later

That first year had major issues with transmitting returns from provider software, but it has pretty much problem free since then. We went the third way which was for the TPA to file on behalf of the client. 1. TPA prepares 5500 2. TPA gets signed 5500 from client with an authorization to file on the clients behalf 3. TPA electronically files the return using their EFAST transmitter credentials 4. Done

I haven't heard anything that points to a 3 year limit, just that it can go back as pre-tax in the year of distribution or after-tax for subsequent years.

Yes, it is in the works but too early to say what will come of it.

One distribution, two transactions. One fee. I understand MTC reasoning, they are separate accounts. The platform charging two fees would bug me too, and I would fight it just to be a PITA if I'm the participant.