Message Boards Digest

April 7, 2020

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

Dennis G. created a topic in Retirement Plans in General

RMD from IRA Taken in January -- Can Put It Back?

"I have a client who took his RMD in January 2020 for 2020 from his IRA. Due to CARES, can he put it back in the IRA now? It has been more than 60 days since he took the RMD."

1 reply   |    53 views   |    Add Reply

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mattmc82 created a topic in Distributions and Loans, Other than QDROs

Tax Notice for CARES Act Distributions

"So it's clear that a 402(f) notice is not required. What about needing to say something about the 10% default withholding (unless chosen otherwise), the repayment period, the stretch taxes, and all that jazz?"

1 reply   |    35 views   |    Add Reply

J-Lo created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Calculating Cost of Self-Funded Health Plan for Purposes of Paycheck Protection Program Application

"Has anyone received formal guidance on calculating self-funded health plan cost for the PPP application? I know you have to back out employee contributions. The banker indicates it has to be on a cash basis; so if true, that would rule out a few methods. Haven’t seen any guidance yet. Carrier has not advised yet either."

3 replies   |    60 views   |    Add Reply

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

Loan Repayment Terms Under the CARES Act -- 5, 6 Pick Up Sticks

"Regarding the extension of a participant's loan past 5 years because of the CARES Act -- Two sources seem to be in conflict. Here are excerpts from the websites:

(Website No. 1:) However, a participant with an outstanding plan loan who is placed on an unpaid leave of absence may forego making loan payments during the leave of absence without triggering taxation of the loan, provided the following requirements are met:

  1. The unpaid leave of absence does not exceed one year.
  2. The loan must still be repaid by the end of the original term of the loan. Thus, the participant may make up the missed loan repayments upon returning to work, resume the original repayments with a lump sum payment of the missed repayments at the end of the term, or increase the amount of each repayment for the remainder of the repayment period upon returning to work.

(Website No. 2:) Any participant loan payments due from Qualifying Individuals between March 27, 2020 and December 31, 2020 can be delayed for up to one year. If this one-year delay applies, the normal five-year maximum repayment term is extended to six years.

See my confusion? One says the loan must be repaid by the original term of the loan, while the other says I can change a 5-year loan into a 6-year loan. Can anyone clarify?"

2 replies   |    50 views   |    Add Reply

rocknrolls2 created a topic in Distributions and Loans, Other than QDROs

Does HIPAA Privacy Apply to Employee Representations Needed for a Coronavirus-Related Distribution?

"I was drafting a Coronavirus-related distribution application form, which included the certification that the applicant is an eligible individual. The employee has to represent that s/he has been diagnosed with Coronavirus, and that a spouse or dependent child has or that s/he has experienced adverse financial consequences -- which seems awfully close to being HIPAA protected health information. Fortunately, this client has a TPA who will be administering this provision (as well as other facets of the plan). Does the possible application of the first two grounds of qualifying for a coronavirus-related distribution mean the plan become subject the HIPAA privacy requirements?"

2 replies   |    41 views   |    Add Reply

Jess C created a topic in 401(k) Plans

Repayment of Coronavirus-Related Distribution Back Into the Plan -- How to Code?

"We are having a debate about the repayment of a COVID distribution back into the plan, and whether they should be coded as normal (pre-tax) or as after-tax. I understand that Roth has to be accounted for separately. Seems to me that, because the repayments offset the tax burden, the monies become pre-tax once again. Agree?"

1 reply   |    30 views   |    Add Reply

JOH created a topic in 457 Plans

Is a 457/403(b) FICA-Alternative Plan Subject to CARES Act?

"Is a FICA Alternative Plan functioning under a 457 or 403(b) plan covered under the CARES Act?"

0 replies   |    19 views   |    Add Reply

mming created a topic in Defined Benefit Plans, Including Cash Balance

Delay of Minimum Funding Deadline by CARES Act

"The CARES Act says that minimum required contributions due in 2020 can be delayed until 1/1/21. If a calendar year DB plan has a 2019 MRC of $40k due, a maximum allowable contribution of $200k, and the employer wants to contribute $100k, then a literal interpretation of the Act would be that $60k is still due by 9/15/20 while only the $40k MRC can be delayed until 1/1/21. In other words, the seemingly unintended effect would be that an amount greater than the MRC would be due by 9/15. Should the new rules be taken to mean that the whole contribution can be deposited by 1/1/21 even if it exceeds the minimum required amount?"

1 reply   |    40 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

'Qualified Individual' Definition Includes Reduced Hours But Not Reduced Compensation?

"Do you think it was intentional or an oversight that the criteria for a qualified individual includes reduced work hours, but not reduced compensation? If a salaried employee is required to work the same number of hours at a reduced salary are they out of luck to be considered a qualified individual?"

3 replies   |    56 views   |    Add Reply

Just Tri created a topic in 401(k) Plans

Participant's Paycheck Is Less Than Amount Elected for 401(k) Withholding

"Participant elects flat dollar amount to be withheld from paycheck. Pay amount for this pay period is less than the election amount. Should the election be ignored or 100% less tax withholding be withheld? The document, deferral procedure and enrollment form are all silent on the issue."

2 replies   |    51 views   |    Add Reply

SSRRS created a topic in Retirement Plans in General

6/30/19 Fiscal Year 5500 on Extension Until April 15 -- Any Further Extension?

"Because many are working remotely, will the June 2019 FYE 5500s that are on extension until 4/15 be included in the new extension?"

1 reply   |    34 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

K-1 Income Determination for Self-Employment Tax

"Looking at a 2018 K-1 for a takeover plan (partnership and each partner is making the same amount). Something doesn't seem right to me. K-1 line 14 is $125,000 (same as Line 1 - ordinary business income). Partner pension deduction is $25,000. Partner employee portion deduction is $1,000. Partner health insurance deduction is $15,000. The amount subject to self employment tax was calculated based on $85,000 ($125k less $25k less $15k). My approach to calculate the amount subject to self employment tax would be $124,000 ($125k less $1k - employee portion). Agree?"

1 reply   |    39 views   |    Add Reply

Stash026 created a topic in 401(k) Plans

Due Date Extended for Funding an Employer Contribution?

"I know there was an extension in funding an IRA with the due date of tax returns being pushed back until July 15. I haven't seen anything as to whether that's true for employer contributions for the 2019 Plan Year. Have you?"

1 reply   |    19 views   |    Add Reply

MGOAdmin created a topic in IRAs and Roth IRAs

Application of CARES Act to Beneficiary Who Inherits an Already-Inherited IRA

"A client's wife inherited an IRA from her mother in 2017. The wife passed in 2020, so now the husband is the beneficiary of the Inherited IRA. Ignoring the waiving of RMDs for 2020 due to the virus, does the SECURE Act now apply -- i.e., does the husband need to take out the full balance within 10 years?"

0 replies   |    17 views   |    Add Reply

MGOAdmin created a topic in 401(k) Plans

Loan Payoff by Beneficiary

"If a wife takes a loan from a 401k plan and passes away before it is paid off, can the husband pay off the loan before the end of the quarter following her passing? Or is it automatically defaulted?"

1 reply   |    26 views   |    Add Reply

Mr Bagwell created a topic in 401(k) Plans

No Coronavirus-Related Distribution/Loan for You!

"So I hear that individuals who continue to work full-time on a reduced salary are not eligible. A self-employed individual has the ability to work full-time but can't drum up work for obvious reasons. They can't take a distribution for adverse financial reasons?"

4 replies   |    65 views   |    Add Reply

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

Eligibility of Participant for Coronavirus-Related Distribution If Spouse Gets Laid Off

"The legislation doesn't count a participant as an 'eligible' participant if the participant's SPOUSE gets laid off due to COVID-related financial issues at the spouse's employer. I'm guessing the odds are that Treasury will add this situation to the list of 'other factors' to be determined. Anyone heard anything on this? I expect that unfortunately there will be a huge number of such situations."

1 reply   |    27 views   |    Add Reply

RayJJohnsonJr created a topic in 401(k) Plans

Corp 'A' Has No Plan, Buys Corp 'B' Which Has a 401(k) -- How to Take Over Sponsorship?

"Corporation A has no Plan, and buys all the stock in Corporation B, which has a 401(k) plan. Corporation A wants to keep the plan. What's the simplest way to do that? Just change plan name and tax ID?"

6 replies   |    39 views   |    Add Reply, Inc.
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