Message Boards Digest

April 1, 2020

Here are the most recently added topics on the BenefitsLink Message Boards:

sdix401k created a topic in Distributions and Loans, Other than QDROs

CARES ACT -- Requirement of Opportunity to Delay Loan Repayments

"Three scenarios. Want to make sure I am reading the Act correctly in regards to COVID Loans and the delay of payments.

[1] We have a new COVID Loan and the participant delays the payments for 1 year. The max loan period is still 5 years and payments that were supposed to start on 1/1/2021 will start on that date. Payments that were supposed to start on 4/1/2020 - 12/31/2020 will start on 04/01/2021. The loan will need to be re-amortized since interest has been accruing and even if payments were doubled the loan would not be paid off within the 5 year period.

[2] There is an existing loan in effect. Participant chooses to delay current payments for 1 year. Let's say it is a 5 year loan and he is in year 2 of the loan. Payments from now until the end of the year are delayed for 1 year. The original loan payments go back into effect on 01/01/2021 and the delayed payments start back up on 04/01/2021. We are now in year three of the loan and that loan needs to be re-amortized to make sure it does not exceed 5 years.

[3] Loan is in 5th year and participant wants to delay payments for 1 year. This is allowed and the 5 year rule is disregarded. Payment continue in next year and need the loans needs to be paid off within 6 years.


2 replies   |    60 views   |    Add Reply

Danny CPA created a topic in 401(k) Plans

Suspending SH Election, Adopt 3% Nonelective by Year-End Under SECURE

"I've seen a few suspension of the SH election questions already, but not this one. If we have a client that wants to suspend their SH election now (either the 3% safe harbor or the match, doesn't really matter), can they elect to become a safe harbor plan later in the year or after year-end based on the provisions in the SECURE Act?

We are wondering if this is a way out of the cash flow requirements now and a possible fix later on if things turn around to avoid refunds. Thoughts?"

4 replies   |    59 views   |    Add Reply

thepensionmaven created a topic in Retirement Plans in General

Terminating Profit Sharing Plan -- Still Must Take an RMD Prior to Rollover?

"Profit sharing plan is in the process of termination, the owners have been taking their RMDs each year. Under SECURE ACT, does the provision of taking RMD prior to rollover apply?"

3 replies   |    48 views   |    Add Reply

thepensionmaven created a topic in Form 5500

Correction of EIN on 5500s

"What is the correct procedure to follow when a client realizes he has filed a 5500 under the EIN of the trust?"

2 replies   |    31 views   |    Add Reply

EBECatty created a topic in 401(k) Plans

'Coronavirus-Related Distributions' -- Limited to In-Service? Extends to Terminated Participants?

"I've seen the newly permissible CARES Act "coronavirus-related distribution" referred to as a new form of "in-service" distribution (or some variant thereof). It pretty clearly seems to apply to in-service distributions, but I don't see anything that would limit a coronavirus-related distribution to in-service.

In other words, if a 50-year-old participant terminated two years ago with a $200,000 401(k) balance, does anything prevent them from taking a $100,000 distribution (assuming they are affected by the virus, etc.) and taking advantage of the favorable tax treatment of this new distribution type?"

8 replies   |    140 views   |    Add Reply

Nothappy64 created a topic in Retirement Plans in General

Lump sum

"I have a separate account on my ex husband pension plan and I want to get payee in a lump sum. So I can by law get a lump sum"
1 reply   |    48 views   |    Add Reply

Susan S. created a topic in 401(k) Plans

CARES Act Effect on Hardship Withdrawals -- Renders 1-per-Year Restriction Unenforceable?

"If a 401(k) plan has a limit of 1 hardship withdrawal per plan year, does the CARES Act override this provision so that a participant can take an additional withdrawal?"

1 reply   |    61 views   |    Add Reply

chibenefits created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Tax Credit for Health Coverage During Layoff

"The FFCRA provides a payroll tax credit for the cost of health care coverage provided during paid family or sick leave. A client asked about a 'rumor' that he heard regarding the availability of a credit for health care coverage provided to employees on a temporary layoff (unpaid). I don't see anything like this in the CARES Act. Am I missing something?"

0 replies   |    18 views   |    Add Reply

ldr created a topic in 401(k) Plans

Can '3508 Direct Sellers' Participate in a 401(k) Plan?

"Can a ' 3508 direct seller' person participate in a 401(k) Plan? They are paid by way of a 1099 rather than W-2 and are recognized as 'Employees' for some benefit purposes. We do not have experience with this type of 'employee'. If the plan defines compensation as W-2 income then they have no compensation to defer from. Maybe they make Roth deferrals or Voluntary Employee Contributions? The plan sponsor DOES want to cover such persons if a way can be found to do so."

1 reply   |    29 views   |    Add Reply

Mr Bagwell created a topic in 401(k) Plans

Merging 2 Plans Into One -- Alignment of Plan Years Required?

"A controlled group of 3 employers had 2 plans. Employer wanted to consolidate the 2 plans into 1. The 2-employer plan has a plan year end of 3/31/2020. The employer merging in has a plan year end of 12/31. The money from merging-in plan was moved at beginning of January 2020. Does the plan merging in need a short plan year to match up to the same plan year end?"

5 replies   |    40 views   |    Add Reply

mming created a topic in Distributions and Loans, Other than QDROs

Effect of CARES Act on the Cure Period

"A participant has been repaying their plan loan as slowly as possible, i.e., relying on the IRS cure period for every payment. For example, any repayments due during the first quarter of 2020 wouldn't be paid until the end of June. With the passage of the CARES Act, could the repayments due during the first quarter (or at least prior to March 27, 2020) now be postponed for 1 year, or do you think the Act allows only postponement of repayments originally due after March 27, without the application of the cure period?"

3 replies   |    40 views   |    Add Reply

ErisaGeek created a topic in 401(k) Plans

Coronavirus Related Distribution

"Does anybody know if the 30 day waiver form will be required to be signed by a participant for obtaining a Coronavirus related distribution? I am thinking no since the Section 402(f) notice does not apply? Any thoughts?"
0 replies   |    20 views   |    Add Reply

nerd-party-administrator created a topic in 401(k) Plans

Plan Termination after stock aquisition

"Facts: Clients company is acquired via stock sale, but TPA wasn't made aware until two months later. Therefore, there were no actions taken to terminate the plan. Question: Since they can't really terminate the plan retroactively, what can be done at this point?"
2 replies   |    31 views   |    Add Reply

Belgarath created a topic in Retirement Plans in General

Plan Has No Loan Provisions or In-Service Distribution Provisions -- CARES Act Requires Them?

"If a plan does not ALREADY allow for loans, or hardship/in-service for that matter, must the plan amend to allow loans by 12/31/2020, and then subsequently (or concurrently) add the Coronavirus provisions, or can the entire loan provision have the extended deadline of 12/31/2022?"

3 replies   |    37 views   |    Add Reply

Ian created a topic in 401(k) Plans

CARES Act Application to IRAs

"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)."

7 replies   |    80 views   |    Add Reply

52626 created a topic in 401(k) Plans

CARES Act -- Application of 1-Year Delay in Cure Period for Plan Loans

"Plan states loans are due and payable at termination of employment Participants cannot continue to make loan payments after termination. The cure period for one terminated participant ends 3/31/2020; another participant's cure period ends 6/30/2020. The CARES Act states if the due date occurs during the period beginning on the date of the Act and ending on 12/31, the due date will be delayed for one year. [1] Are these participants eligible for the 1 year delay? [2] Does this mean their cure period is 1 year from the 3/31 or 6/30 date? [3] How are the plan document and the requirement that loan payments by terminated participants impacted by the CARES Act? In particular, laid-off and furloughed participants -- can they continue to make loan payments, or will the document need to be amended to allow for these payments?"

0 replies   |    28 views   |    Add Reply

Joe Rak created a topic in SEP, SARSEP and SIMPLE Plans

Can SIMPLE IRA Suspend Match?

"Client with a SIMPLE IRA wants to suspend matching contributions. CARES Act addresses 401(k) mid-year suspension but not SIMPLE IRA."

0 replies   |    16 views   |    Add Reply, Inc.
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