Larry Starr

I'm beginning to change my mind; I think we will end up with codes 1 and 2, and you report 1/3 of the amount (or more if you want) on each return for the next three years. If you make repayment within the 3 year period, you will have to file an amended return to recover the taxes. I have re-looked at what we did last time and I now think you are probably right that the burden will be on the taxpayer to get his money back. Thanks.

You don't really have an EIN for the plan, you have a Trust ID Number for the trust (yes, it looks the same format). The employer's EIN is what is supposed to be used on the 5500; the TIN is used just for holding assets and reporting distributions from the trust (unless you are on a platform; then the platform uses ITS EIN to report the distributions). There is a process for informing the IRS of a name change associated with an EIN. In this case, you should use the employer EIN and notify the change via the boxes on top of the 5500. I'll try to remember to have my staff give me the info for how you get an EIN assigned to a different name tomorrow and post it.

Agreed.

Because of the complexity from a tax situation of tracking the 3 year repayment, and into any plan, I do believe we will get a new code that tracks that particular issue. I am guessing there will also be a 1040 schedule that reconciles that amounts each year until it disappears (by pay back) or becomes taxable or is treated as taxable. But only time will tell.

You don't get it because it will be shown that they are wrong; I would not worry about that confusing language. Also, remember, no one is going to check if the individuals who self certified were actually correct.

No doubt in my mind. The plan doesn't care where the repayments come from, assuming the loan policy doesn't say upon death it is defaulted (which it shouldn't).

No; it's based on the date of death of the original owner. Old rules still apply to this situation. CORRECTION: If an inherited IRA owner passes after 2019, the new rules are applicable (the 10 year payout). If it was prior to 2020, the old rules do apply.

The employer obviously withholds the flat dollar amount UP TO the amount available in the paycheck. While it might be useful to have such language dealing with this situation in the election form (which would say exactly the same thing I said in the first sentence of this response), I think it is a given and no other option is possible. Asking the employee is probably not practical as no one is watching that the payroll will be less than the election and there likely is not enough time to get a new election signed that changes the amount, and I (as the employer) wouldn't bother asking. Take all that we can up to the limit, and then on to the next payroll period.

I believe they will qualify under the definition below. The participant will certify that they have "adverse financial consequences" and the employer will be able to accept that no questions asked. That's the practical answer. At some point, I expect the "other factors" will cover this, but for practical purposes I don't think it will matter. If the employee certifies, who is ever going to check? Who experiences adverse financial consequences as a result of: being quarantined, furloughed or laid off, or having work hours reduced due to COVID-19 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 determined by the Secretary of the Treasury.

When contributed back under the rules, the money looks just like it did before it came out. Given that situation, how can you show it as anything other than normal pre-tax funds?

I think until you do an amendment, anything you provide can't be called an SMM. But otherwise, no big difference.

For now, you are out of luck. We are hoping (maybe even anticipating) that IRS will grant additional time for these rollovers; such relief has been officially requested (among other issues). We shall see..

I always do my SMM at the same time as we do an amendment. The amendment is sent for client signature along with the SMM with instructions to distribute appropriately. And yes, if we did any of these amendments, we would send the SMM with it. If you are doing it without amendment at this point, I think a letter to the participants explaining their new options is critically important to meet fiduciary requirements.

Sure; belts and suspenders. Like I said, it's not the only way, but it is the way we do most of them.

Not yet, but I will bet that it will definitely be an allowable situation under this part of the law: * Who has experienced adverse financial consequences due to other COVID-19-related factors to be specified in future IRS guidance.

ldr, as the messenger it is up to you to ask those who ask you to post something for a more complete explanation that you can provide so that people don't waste time (or worse, just skip our question) trying to get you a reasonable response. But I think you have your answer. Assuming they are properly classified, they are no longer employees for retirement plan purposes.

There are no procedures yet, so the answer is you have to wait, as frustrating as that is. I have no doubt that the big recordkeepers are floundering about to figure out what to do, and will eventually come up with something (that might be good or bad). For now, just live with the actual results. If a participant wants to stop paying, just have them stop paying. Within some short period, you will likely have guidance. I know FIS (Relius) is actively working on modifying their admin system. FWIW

Yes; too late. Your next opportunity is for the year 7/1/20 - 12/31/20.

Well, I'd rather say that it is not the only way. A corporate officer can have the authority. In some cases, it just needs to show up on a tax return and it is considered an action of the business. In this case, I go with the "no no" answer as well.

Here's the apropos section: 2020 Required Minimum Distribution Waiver for Defined Contribution Plans and IRAs (§ 2203) Similar to a required minimum distribution (RMD) waiver that was available in 2009 during the Great Recession, the Act allows tax-qualified defined contribution retirement plans, 403(b) plans, IRAs or eligible 457(b) plans to postpone by one year (1) all required minimum distributions that must otherwise be made in 2020 and (2) all required beginning dates that would otherwise occur in 2020. In the case of a defined contribution plan, an amendment to add this provision must be adopted by the end of the first plan year beginning on or after January 1, 2022 (December 31, 2022 for calendar year plans), or, for governmental plans, after January 1, 2024 (December 31, 2024 for calendar year plans). Considerations and Comments Retirement plan sponsors that adopt this feature will provide participants and beneficiaries with an opportunity to leave amounts in their retirement accounts and avoid taking required minimum distributions in 2020 during a period of steep market declines. However, participants and beneficiaries who wish to receive a distribution will remain eligible to do so, and the distribution will be exempt from certain other requirements in the code. Specifically, the distribution is not subject to the mandatory 20% withholding; the plan does not need to provide a 402(f) special tax notice; and the recipient does not need to be provided the opportunity to make a direct rollover of the distribution.

Susan: you've got to be kidding! You are worried now about what you are going to do in January of next year? I would suggest you wait for guidance. The legislation is a week old! My own guess is that we are going to have (possibly) a special new code or how is the IRS going to track the 3 year payback rule? I'm thinking there may also be an attached schedule similar to the form that carries the after tax contributions to an IRA forward from year to year. My guess is that such a form will track repayments (with special codes on 1099s?) so that if at the end of the 3 years you have an outstanding amount, it will hit your 1040. But we've got time for that one.

Your honor, we are all willing to stipulate to that rule.

Everyone is right; that language about required beginning dates in 2020 was to take care of delayed 2019 first time RMDs that elected to delay their RBD to 2020. That's how those were incorporated into the rule.

Good thing we have an actually here to keep reminding us about those darn DB plans! ?

Nicely summed up; however, this one quote from the posting produces an additional comment: "The probate lawyer representing the wife dismissed the possibility of the wife being entitled to the 401K since the son was designated as the beneficiary. As a result, the wife dropped the pursuit of the 401K." The wife might have a malpractice claim against the probate lawyer for his stupidity and error. A new lawyer needs to consider adding the probate lawyer to the list of bad actors if there has to be a lawsuit.