CuseFan

Peter, that is a great idea and something we've suggested but I have not yet heard of anyone asking for and getting a professional opinion letter from their accountant or attorney. I expect any such letter would be caveated from here to Wuhan, limiting any usefulness to a demonstration of good faith if needed in the wake of an adverse governmental interpretation.

CRDs are temporary, so no, you would not want to generally amend distribution timing unless you wanted to keep it that way. Just amend for CRDs by 2022 deadline, but be sure to do so in conformity with how the plan was administered, whether to the fullest extent of the law or on some other restricted basis.

And there could be other issues - if another plan or IRA that is asked to accept a rollover wants proof that the plan is qualified, or if a participant is filing bankruptcy and looking to protect qualified plan benefits from creditors. Having a FDL is not required but it is certainly advisable. That the prior TPA, rather than the client, is making the argument raises a big red flag to me - I would have a meeting with the client and then suggest you go over every thing with a fine-toothed comb.

Favorite quote of day! Another example of how payroll providers have difficulty correctly handling their specialty (i.e., doing payroll). So why anyone would trust them with an ancillary service like 401(k) administration, with which they have little expertise? - just sayin'

Proceeds must be used for "payroll" expenses within 8 weeks, although there are discussions that could get extended. Payroll includes benefits and retirement contributions in addition to wages. Payments to cover health and welfare benefits don't go "to" employees but are made for the benefit of employees, so how would retirement contributions be any different? And if the contribution went to a DB plan it doesn't get allocated to individual employees at any time regardless. However, I would steer my clients to their accountant and/or attorney if they are considering using PPP to fund retirement plans beyond what they would normally fund for the subject 8-week period, like matching and/or safe harbor contributions funded on a payroll period basis. I'm not saying it can't or shouldn't be done, and I am a proponent of serious consideration for doing this - but it is a tax and legal issue without a lot of exacting guidance, so those are the people who should be advising clients on this, not their plan providers or TPAs.

Sarbanes-Oxley (the Enron law) provides the limits/requirements concerning other/non-audit services that a company's auditors can perform. Issues arise when the firm is auditing numbers that go on financial statements that it generated, resulting in auditing their own work. Standards may be different for public and private companies, and plan audits versus corporate audits, but this is a professionalism/ethics issue to be explored by the auditors within the respective firm, not the TPAs.

The PPP Q&A seemed to indicate it is allowed and Marty Pippins said as much in an article posted on ASPPA site. Retirement contributions are considered payroll costs and DB contributions were specifically mentioned with DC contributions as not subject to the $100,000 of pay limitation. What is not clear is whether any and all DBP contributions made during the 8-week post PPP receipt window could count as payroll costs. As this is quite a gray area absent any more guidance, we suggest if any of our clients are interested in pursuing that they consult their accountant, attorney or both. One thing that is certain, an unincorporated sole proprietor cannot use PPP top fund retirement.

I think pre-approved plans (at least FT William) have built these is already. The FTW one is written such that an employer may grant such relief, presumably by a resolution to "activate" the provision. So there is still a decision and paperwork required but not necessarily an amendment. I'm not expressing an opinion as to whether this is or is not the best way to handle, just communicating how it had been explained to me and how I understand it. The issue is that COVID-19 is considered a national (health) emergency rather than a natural disaster and so had to be specifically legislated (CARES Act) for relief.

It's possible and likely. You wouldn't "lose" your pension but your payments would stop because you wouldn't be considered retired. They would resume when you again retired. Retirement meaning you are not working in any covered employment as defined by your union/plan.

Agree with Bird. If my pay is adjusted for the reduction and my reduced pay is now my pay, fine, but if I'm funding my own SH through an actual payroll withholding, I think that is a huge issue. And the math doesn't work either as you note.

The document absolutely says what you need to do but you may need to dig for it and tie a couple of different sections together. The important item to identify is the annuity starting date, which should also be defined in the plan. ASD can be different for annuity versus lump sum, but for a plan termination is likely the proposed distribution date. Follow the plan's provisions for death before or after the annuity starting date as applicable. Some plans (individually designed, as I haven't seen in pre-approved documents) may specify the particular situation where a valid election is made but the participant dies before the annuity starting date and may pay the benefit according to the election but I would not say that's an "automatic". Hopefully, if needed, you can get the surviving spouse/beneficiary to elect a lump sum now in place of the participant.

CRDs are optional and an employer can place more restrictions than are legally required (e.g., limit eligibility, limit amount, etc.). If wanting to allow for just for terminated employees, OK. That gets them out of having to withhold 20%, but otherwise no difference as everything else is an individual tax issue if employee is a Qualified Individual.

They could exclude from match (subject to coverage) but not salary deferrals because of universal availability, is my opinion/understanding.

I think the plan must accept rollovers, which typically isn't the case with a DBP.

Mr. Peabody and his pet boy Sherman would be proud.

Agreed, and the sponsor being able to afford the cost would not even be a consideration for any relief since the expense can be paid from plan assets.

Happy Birthday and Thank You for this valuable resource!

with exception for small plans (under 100), which have essentially 7 months.

Yeah, that had me confused too. If a plan will not permit CRDs, then I don't see how it justifies not w/h 20%.

Plans can impose whatever limits they want, is my understanding, provided they are applied uniformly without discrimination.

Everything I have read says a "qualified person" can treat a distribution received in 2020 as a CRD. From NAPA Q&A, and read similar in other places as well. Plan treatment and Participant treatment are independent. CD4: Are terminated participants eligible for a COVID-19 distribution? A: Yes. The treatment to an individual participant is independent from the treatment by the plan. In other words, it doesn’t matter to the participant what the distributable event from the plan was. It may have been due to the plan permitting a COVID-19 distribution or due to another triggering event, such as termination of employment. If the participant is a qualified individual and receives a distribution in 2020, then the individual is entitled to treat the distribution as a COVID-19 distribution—there is no 10% additional tax; the amount can be included in income over three years; and there is a three-year repayment right.

Could a plan that does not otherwise want to permit CRDs in terms of expanded distribution availability nonetheless allow for them on a limited basis (identical to existing distribution availability) such that the 20% w/h is waived? Plans can limit CRDs as desired (on a uniform and nondiscriminatory basis). I assume an amendment would be necessary to do so. Thoughts?

I've been searching for a definitive answer to that for a couple of days and have not seen anyone (industry group and/or legal summaries) explicitly say that if a plan does not permit CRDs that they still w/h 20% even though a qualified participant can treat a 2020 distribution as a CRD. Maybe it's there between the lines - that a 2020 distribution can be both not a CRD as determined by the plan, in that it doesn't permit, and a CRD as determined the participant. Each treats distribution in that fashion. I can get there, was really hoping someone "official" would come out and clearly state it. Both a CRD and not a CRD at the same time? I am hereby renaming CRDs as Schrodinger's Distributions.

Agreed. The only thing I would expect might be allowance for more "virtual" witnessing or notarization of consent, which there was a discussion thread on that last week? Week before? Six Sundays from next Tuesday - anyone know what the heck day it is?!

I think you may be OK if none of those earning an accrual is an HCE, otherwise, you may have to amend (if no fail safe language) in some fashion to provide accruals, like lowering the hours requirement to the extent necessary to benefit 40%.