Ian

Could a cure period extend the new January 2021 repayment date until June 30, 2021?

Good point that I totally missed. Thanks.

OK. I missed a payment in May 2020, and the DD took place on September 30.

Assume I had a deemed distribution in May 2020. My plan allows a cure period until September 30. My plan has also delayed repayments for CARES Act qualified individuals through December 31, 2020. If I'm a qualified individual, do I get more time to repay?

Any thoughts about whether a plan that adopts the CARES act loan repayment delay provision can (or must) extend the plan's cure period when there is a deemed distribution of an outstanding loan? Thanks for your help.

Is any thought as whether a plan that has adopted the CARES Act delay in loan repayments and permits a cure period for a deemed distribution would be allowed to (or required to) extend the cure period? Thanks.

And if under 59 1/2, no early distribution penalty, correct?

Thank you for setting me straight. Just to make sure I understand: Assume someone has a $50,000 account balance (of which $10,000 represents a loan) and terminates employment owing $8,000. The $8,000 loan offset leaves him with a "regular" $42,000 distribution. If he is a "qualified individual," he has three years to come up with the funds to roll over the $8,000. Is that all correct?

With the CARES Act increase in plan loan limits, it seems more likely that a deemed distribution (rather than a loan offset) will be necessary when someone terminates employment with an outstanding loan and can't pay it off. That's because, if someone borrows 100% of their account balance, there will be little or no funds in their account to offset the loan balance against. Do you agree with that? Also, does anyone believe whether a plan that adopts the CARES act loan repayment delay provision can (or must) extend the cure period when there is a deemed distribution of an outstanding loan? Thanks for your help.

Thanks, appreciate it.

Assume that I do the three-year spread of my CRD. I understand that Notice 2020-50 (the carryback option) allows me to amend my 2020 tax return if I repay more than 1/3 of my CRD before timely filing of my 2021 return. In that case, the first 1/3 is applied to 2021 income. But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something? Also, what happens if I repay more than 2/3 of my CRD before the timely filing of my 2021 return. I assume the first 1/3 of the repayment is automatically applied to 2021. For the remainder, can I allocate it any way I want between a 2020 carryback and a 2022 carryforward? Thanks for your help.

Thanks. That much I understand. But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something? Also, what happens if I repay more than 2/3 of my CRD before the timely filing of my 2021 return. I assume the first 1/3 of the repayment is automatically applied to 2021. For the remainder, can I allocate it any way I want between a 2020 carryback and a 2022 carryforward? Thanks for your help.

Forgive me if this topic has been covered. Assume I receive a $75,000 CRD in 2020 and spread income over 3 years. Then I decide to recontribute $25,000 of the CRD. Notice 2020-5, in Section 4E, says that if I make the repayment before the due date (plus extensions) for the 2020 tax return , I can wipe out the $25,000 for 2020. The same would be true for the 2021 and 2022 returns. But if I make the repayment after the 2020 tax return deadline (but within 3 years), can't I still have the 2020 income wiped out by filing an amended 2020 return? Or is it too late? The Notice doesn't address this. And the fact that the IRS does specifically address amended returns in Section 4D (when the CRD is all included in 2020) gives me pause. Any thoughts?

Appreciate the response. Any idea why the IRS keeps referring to "participant elections, including spousal consent" in Notice 2020-42?

I'm aware that the IRS recently allowed remote notarizations and witnessing by plan representatives. I'm also aware that witnessing is required for spousal consent of non-QJSA distributions and loans from plans subject to the QJSA rules. What's confusing to me is that the IRS Notice refers to the relief being available to "participant elections, including spousal consent." Are any participant elections subject to the witnessing rule? Thanks for your help.

Does the CARES Act allow a "qualified individual" to repay 2020 Roth IRA distributions within 3 years? The law says that only CRDs that are eligible for rollover under section 408(d)(3) can be repaid, and it doesn't look like that section covers Roth IRA rollovers. Thank you.

Just as I thought. Thank you for the confirmation.

Two follow-ups: 1. Since lifetime annuity payments aren't eligible rollover distributions, I would think the 3-year payback relief is not available. 2. Is there any reason why the ability to spread out tax over 3 years shouldn't apply to DB retirees who are qualified individuals? Thanks for any input.

Makes perfect sense. Appreciate the response.

My usual apology is this has been asked and answered. The CARES Act allows special tax relief for 2020 distributions up to $100,000 by a "qualified individual" from a defined benefit plan, as long as the distribution is not made earlier than an otherwise-permitted distribution event. But the special tax relief implies that a lump sum will be taken. How would the $100,000 limit and special tax relief apply to an in-service annuity payment from a DB plan (or even a money purchase pension plan)?

Forgive me if this has been covered. The SECURE Act allows employees with 401(k) annuities the opportunity to preserve the annuity if the plan sponsor changes providers or eliminates the option altogether. Employees can do a direct transfer to an IRA or another plan that accepts the annuity. Or, it can do an in-kind distribution. The first option would be tax-free, but what about the second? Appreciate any insight.

If you look at Notice 2009-82,the IRS gave employers the option of deciding whether to treat any RMDs paid as eligible for direct rollover. The IRS also said any RMDs paid would not be subject to 20% mandatory withholding.

I'm an attorney/consultant trying to advise clients. I'm fortunate not to be an affected person. Just trying to see if a consensus has formed on the optional vs. mandatory question. Nothing more than that.

This is the ERIC letter. See A. 4.: https://www.eric.org/wp-content/uploads/2020/04/ERIC-Tri-Agency-Request-for-Specific-Plan-Sponsor-COVID-19-Guidance-04-06-2020.pdf

Bill, Did you look at IRS Notice 2009-82: "To address the concerns of plan sponsors, two alternative sample plan amendments are provided in the Appendix that individual plan sponsors and sponsors of pre-approved plans can adopt or use in drafting individualized plan amendments. Both sample amendments provide participants and beneficiaries the choice between receiving and not receiving distributions related to 2009 RMDs." Or this, from ERIC, the retirement industry lobbying organization: "The CARES Act suspended the requirement to issue required minimum distributions (RMD) for 2020. The CARES Act makes this suspension optional with the plan sponsor." Or, this from Robert Richter, Retirement Education Counsel for the American Retirement Association: "A common question regarding the CARES Act distribution, loan and required minimum distribution (RMD) waiver provisions is whether these provisions are optional or mandatory. In most cases, they are optional—but in the retirement world there are very few questions where a short answer will suffice."