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Patty

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  1. Peter, this is exactly what we are struggling with. The terminal illness provision is not a basis for a distribution on its own. So if the participant is a terminated vested who is 47 years old, wants to cash their benefit out, and meets the terminal illness definition, if we want to help that participant preserve their ability to repay and to get the exemption from the 10% penalty, it seems to me that we, as the payer of a distribution, should offer to take a doctor's certification that the participant meets the Act's definition, and report the distribution on box 7 of IRS Form 1099R as Code 2 - early distribution, exception applies. Now, how he repays it is another question. Do we have to let him repay it to our plan? As you note, if he wants to repay it to his IRA, what is an IRA provider going to require as proof that it was distributed under this Section? Something from us? His 1099R? We were going to do essentially what you did - add a provision that includes the terminal illness definition and repayment. Thanks, Peter. You're one of the great contributors to this site, BTW.
  2. Hi all. Section 326 of SECURE 2.0 regarding terminal illness was effective December 29, 2022, and exempts benefit recipients from the 10% early distribution penalty if they have a terminal illness as defined in Act. They also can repay the distribution under the same terms that apply to the qualified birth or adoption distributions. The Plan Administrator is required to get a doctor's certification providing that the participant meets the statutory definition. IRS has not released any guidance on this. Are your plans administering this? Have your plans been amended for this? Do you intend to amend your plans for this? Any thoughts/experience on this would be welcome. Thanks!
  3. No plan I have ever represented has had a provision on disclaiming benefits. In the few instances this has arisen, we have permitted the beneficiary to disclaim the benefit, as long as the requirements were met.
  4. DOL has been doing audits on this already, and they have added extensive questions on it to their pre-audit information request letters. I have not seen such a letter - but there is a lot of chatter about it, and checklists circulating.
  5. https://www.pbinfo.com/ My clients have been using PBI for over 30 years. They have saved us millions - literally - net of fees.
  6. Thanks @justanotheradmin for the link! A very closely watched case.
  7. The distribution seems to me to be a lump sum distribution requiring 1099R reporting and 20% withholding (if it's an ERD). The insurance company should account for the investment amount having been taxed by basis reporting.
  8. The governmental 457(b) plan finds out that a participant lied on their application for a distribution for unforeseeable emergency. The truth would have resulted in the application being denied. Does the plan have to do anything more than file the 1099-R with an "early distribution - no known exception" code? Do we have to/can we even recoup it from the participant? Should we file an attachment to the 1099-R about the circumstances? Any thoughts appreciated. I'm a newbie here, so please be kind.
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