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I have a plan that did not want to allow CRDs. A few were paid by the recordkeeper and the Plan Sponsor noticed and shut them off. I assume that the recordkeeper contacted Plan Sponsors to tell them the "default" was to allow unless they communicated that they did not want to offer. When they noticed that some were paid, they shut them off. The recordkeeper tried to recoup the money recently but the employees either didn't respond or had been terminated and had received a full distribution. How should they correct? I suggested having the Plan Sponsor adopt the CARES amendment but to only allow until they were shut off. Any other ideas? If they don't adopt the CARES Act CRD - then don't they have a operation error where they did not follow the plan document?

Good afternoon. Just when I think I understand the CARES Act . . . I cannot find a thread that discusses a loan offset under the following situation, though I was sure I had read one. Please advise me of the thread if one already exists. The participant had an outstanding loan and was up-to-date with his loan repayments at March 27, 2020. The Plan implemented the CRD and CARES Act loan provisions. Loan repayments were suspended until January 1, 2021, at which time they are re-amortized and resumed. The participant is a qualified individual and stopped making loan payments when the Plan offered the loan suspension. The Plan permits participants to continue making loan repayments after termination of employment. The Plan provides that a loan is in default if payment is not made the end of the maximum cure period On June 1, 2020, the participant, while still a qualified individual, terminated employment and took a CRD of all his vested account, except for the outstanding loan. When does his outstanding loan become a loan offset: June 1, 2020, when he took the CRD distribution? No--because the Plan permits him to continue making loan repayments after termination of employment. And, the IRS has suspended loan repayments until July 15, 2020. OR Yes--because he took distribution. He can treat the entire amount, including the loan offset, as a CRD distribution. (The sum of the CRD and loan offset are less than $100,000.) July 15, 2020, when he failed to resume loan repayments? No, because he is a qualified individual and has until January 1, 2021 to resume loan repayments. OR Yes, because he had 30 days after termination of employment to repay the loan and he did not. He can treat the entire amount, including the loan offset, as a CRD distribution. January 1, 2021 if he fails to resume loan repayments? If so, this cannot be treated as a CRD because it occurs after December 31, 2020. Thanks for your help.

A Terminated Participant would like to request a CRD in lieu of the Terminated Participant Distribution, I suppose to waive tax withholding. The Plan permits CRDs. Are Terminated Participants who terminated prior to 2020 permitted to request a CRD? Thank you