DKE

Hi Austin, thank you for sharing your draft language for the amendment. That's helpful as we consider how we will approach the differing defaults, and I don't have any suggestions or edits to the language. We prepared and distributed the SMM earlier this year, and we elected to specify and customize. Since we didn't use the document system, this was fairly easy using Word versions. Are you planning to make the plan specific election in the document system? And then apply special language/library text to update the language in the actual amendment? We also use FIS, so I'm pondering how this will work with the SPD the system will generate if there are no elections in the hardship amendment source section...

The SECURE Act requires full distribution of a 401(k) account balance within 10 years for a designed beneficiary (i.e. a beneficiary that is not an eligible designated beneficiary). However, it doesn’t appear that SECURE Act amends Section 1.401(a)(9)-5 regarding RMDs from DC plans. Under A-1(e) of 1.401(a)(9)-5, with respect to annuity contracts, specifically refers to 1.401(a)(9)-6 relating to 401(a)(9) being satisfied through an annuity contract purchased through an insurance company. The question is regarding a joint and survivor annuity, such as a 20 year period certain, under which the beneficiary is not an eligible designed beneficiary as defined under SECURE. If the participant dies with 14 years remaining in the period certain, can payments continue for the full 14 years remaining or must the full death benefit be paid to the beneficiary within 10 years as required under the SECURE Act? It appears the full 14 years would still apply since the SECURE Act does not appear to have amended the provisions relating to an annuity purchased within a DC plan.

Hello -- and you are not alone! I was glad to see your post/question. We administratively did the same thing, based on whether the plan allowed all sources or limited sources. I asked the same question at an FIS Advanced Pension Conference and was told (I believe by Derrin Watson) that we couldn't have two defaults signed by us as the document sponsor. We need to "pick one" as our default and sign the amendment on the plan's behalf. For the second group, the employer needs to sign the amendment. Obviously, we are not excited about that answer! I'm interested in your "if this, then this" words approach in the amendment as an alternative, and I'm curious to see if others are in the same boat...

Thank you both!

Good afternoon -- I'm looking for confirmation on whether COVID-19 falls within the new disaster category of Safe Harbor hardships under the hardship final Regs. While this pandemic is listed on the FEMA website for each state, it was declared an "emergency" rather than a "disaster". In researching, it appears the Robert T. Stafford Disaster Relief and Emergency Assistance Act classifies both an emergency and a major disaster as types of disasters, so it appears to be eligible for hardship distribution (if allowed under the plan terms). However, I found conflicting information on a law firm's website that states it's an emergency but not classified as a disaster for safe harbor hardship purposes. Thoughts?