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ombskid

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Having trouble understanding Coronaviris Related Distributions in a currently terminating plan.

Is it the sponsor's option to allow distributions as part of a termination to be CRD'S?

If a notice of termination has been sent can the sponsor still opt to allow CRD's?

Thanks in advance.

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3 minutes ago, ombskid said:

Having trouble understanding Coronaviris Related Distributions in a currently terminating plan.

Is it the sponsor's option to allow distributions as part of a termination to be CRD'S?

If a notice of termination has been sent can the sponsor still opt to allow CRD's?

Thanks in advance.

CRDs are an option to add at the employer's level.  What is so good about CRD is that whether the plan calls it a CRD or not, the participant can self certify it as a CRD and treat it as such.  The plan can still be amended to adopt CRD language, but I say why bother?

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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If the plan sends out the standard distribution request form, there is no option on the form to have it treated as a CRD. For most, doesn't that mean 20% up front withholding? Would they "treat it as such" when they file their taxes, and get back some or all when they file their taxes over the next 3 years?

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15 minutes ago, ombskid said:

For most, doesn't that mean 20% up front withholding?

Yes

 

15 minutes ago, ombskid said:

Would they "treat it as such" when they file their taxes

Yes

16 minutes ago, ombskid said:

and get back some or all when they file their taxes over the next 3 years

The distributed amount is included as income in 2020 or over 3 years.  If the withholding exceeds taxes due, it could be refunded or carried forward to the next year.

 

 

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11 hours ago, ombskid said:

If the plan sends out the standard distribution request form, there is no option on the form to have it treated as a CRD. For most, doesn't that mean 20% up front withholding? Would they "treat it as such" when they file their taxes, and get back some or all when they file their taxes over the next 3 years?

If the participant wants to avoid withholding, do a direct transfer to an IRA and then take the funds out of the IRA.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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