Ian

After a week of parsing through the analyses and commentaries, it appears that a general consensus has emerged that all of the CARES Act benefit provisions (RMD waiver, coronavirus -related distributions, loan maximum and loan repayment suspension) will be treated as optional. With regard to the RMD waiver, in 2009 the IRS even allowed companies to have participants choose whether to take the RMD. Is that the conclusion you guys have reached?

This is from a letter from ERIC (the retirement plan lobbying group) to the DOL and Treasury Dept. asking for CARES Act guidance and clarification: "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." ERIC goes on to cite IRS Notice 2009-82 in which the IRS said 2009 RMDs were optional. In fact, the IRS even said that plans could have participants choose whether to take 2009 RMDs.

RatherBeGolfing, Do you have an opinion on whether the loan repayment suspension is optional or mandatory?

Not missing anything at all. I've seen this described as "an unconscionable oversight" on the part of Congress.

Thanks for pointing out the Katrina analogy. It certainly muddies the waters on whether the loan suspension is optional or mandatory.

To me, the law is pretty clear that it's only "qualified individuals."

I have read several commentaries saying that the increased loan maximum for "qualified individuals" is an optional change, but that the loan repayment provision is mandatory. Any thoughts? Thanks.

Makes perfect sense. But then what's 2203(c)(2) about? Isn't this virtually the same language as in 2202(c) that we are relying on to say that the relief for plan coronavirus-distribution and loans is optional? In other words, if plans can't pay RMDs in 2020 because of a revision to 401(a)(9), then why the need to amend the plan document?

But I guess what I'm asking is whether a plan could decide that it's going to continue to pay RMDs in 2020 (i.e., not adopt the waiver).

OK, so a plan that fails to adopt the RMD waiver wouldn't violate 401(a)(9) because it's paying more than the minimum. Doesn't that make the waiver optional?

I thought that too, but the same amendment language supporting the conclusion that the withdrawal/loan provisions are optional (2202(c) is also in the RMD section (2203(c)).

It seems to be generally accepted that the CARES Act provision for coronavirus-related distributions from company plans is optional -- not mandatory. What about distributions from IRAs? After all, the section 2202(c) amendment requirement applies to "annuity contracts and plans." Also, what about the RMD waiver? The same amendment requirement in section 2202(c) is also in section 2203(c)/

Does section 2202 of the CARES Act introduce a brand new in-service distribution category for 2020 coronavirus-related distributions by "qualifying individuals"? Or does it still require employees to satisfy the existing IRS hardship safe harbors and then provide tax relief to hardship withdrawals that qualify as coronavirus-related distributions?

Can you point me to guidance that says a 457(b) plan can't accept after-tax contributions? Thanks.