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Message Boards Digest

April 13, 2020

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

Ian created a topic in 401(k) Plans

CARES Act Loan Provisions -- Optional vs. Mandatory

"After a week of parsing through the analyses and commentaries, it appears that a general consensus has emerged that all of the CARES Act benefit provisions (RMD waiver, coronavirus -related distributions, loan maximum and loan repayment suspension) will be treated as optional. With regard to the RMD waiver, in 2009 the IRS even allowed companies to have participants choose whether to take the RMD. Is that the conclusion you guys have reached?"

10 replies   |    124 views   |    Add Reply

kmhaab created a topic in Church Plans

Can Get a Private Letter Ruling on 'Church Plan' Status for Proposed Retirement Plan?

"Does anyone know if the IRS will issue a PLR on the church plan status of a proposed retirement plan? Sponsor would like to adopt a plan but wants to know what they are getting into. I know Rev. Proc. 2020-1 states will not issue a PLR on a 'hypothetical situation or alternatives of a proposed transaction,' but it's not 100% clear to me the proposed adoption of a plan falls into those categories."

0 replies   |    40 views   |    Add Reply

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

Application of CARES Act to 15-Year Residential Loan

"Unlike a Coronavirus Related Dinstribution which is an entirely new type of distributable event, it is my understanding that the CARES Act loan provisions must work in concert with existing loan procedures. If accurate, and if the plan allows for residential loans to be paid back over a 15 year term, can a qualified individual who is in the middle of building a new home request a $100,000 loan with a 15 year term, assuming all $100,000 is being used to pay construction costs and assuming the plan is amended to allow the increased CARES Act loan limits? The only mention that I think I see in the Act regarding 5 years is with respect to delaying payments, not with the actual term of the loan. It seems this would be possible, but once again, I'm looking at a recordkeeper's new CRL form that specifically says the loan can only be for 5 years, so maybe I'm wrong."

0 replies   |    33 views   |    Add Reply

thepensionmaven created a topic in 401(k) Plans

Improper Allocation

"Accountant asked for a consult on a client's 401(k). Prospect apparently did not review TPA's allocations of SHM and contributed an amount equal to the SHM plus an amount equal to employee deferrals as the SHM contribution. Upon instruction from bookkeeper, the difference was allocated to the profit sharing portion of the plan. His client discovered this and hit the ceiling, insisted the money be returned to the company (although he was told by the fund holder the money could only be returned with their check to the plan or held in an unallocated account). Client insisted on a check to the plan, which he endorsed as trustee and deposited into his business account, although he was advised of the ramifications of so doing. Apparently the profit sharing doc called for a new comparability allocation, which was done. The fund holder, upon instruction from TPA, reallocated the funds, but apparently improperly. Accountant asking for advice on how to clean up. I would think the under-age or coverage that was taken from each participant's account would be reallocated to the affected participants on W-2 for the year of correction, not the year the contribution was made? I ain't doin' it."

4 replies   |    78 views   |    Add Reply

CMC created a topic in 401(k) Plans

CARES Act -- Increase Loan Limits Beyond 50% of Account Balance?

"A large, mid-Atlantic recordkeeper has advised our client that while it can increase its loan limit to $100k, they recommend the client not increase to 100% of the vested balance but instead stand pat at 50% (or perhaps 75% if the client feels strongly about it), citing ERISA's adequate security requirement (one of the requirements such loans have to satisfy to come within an exemption to the prohibited transaction rules). Has anyone else encountered this concern or otherwise got thoughts?"

9 replies   |    151 views   |    Add Reply

Craig Jacobs created a topic in Defined Benefit Plans, Including Cash Balance

Notice 2020-23 Extension Applies to Annual Funding Notices?

"Does the recent IRS Notice 2020-23 apply to Annual Funding Notices? Would they be delayed to July 15 as well or still due April 30?"

1 reply   |    62 views   |    Add Reply

Christine Roberts created a topic in Correction of Plan Defects

7- to 8-Month VCP Turnaround -- What Is Your Experience?

"I just received two compliance statements for VCP applications filed in early August and early September 2019, respectively. Not sure what others are experiencing in that regard. Given recent confusion about referral to audit which was all a misunderstanding but which was rooted in how overloaded the program is, I am trying to calibrate clients' expectations about the program going forward. Would be interested to hear of other experiences with turnaround times."

4 replies   |    60 views   |    Add Reply

Suckafish created a topic in 403(b) Plans, Accounts or Annuities

403(b) -- Ability of Surviving Spouse to Take Over Contract

"Can a spouse beneficiary of a 403(b) tax-deferred annuity take over the contract (i.e., assume it 'as is'), or does it need to be surrendered with the proceeds eligible for rollover treatment? What is the authority for disallowing the survivor from taking over the contract?"

0 replies   |    32 views   |    Add Reply

Jakyasar created a topic in Form 5500

Is the IRS Office Open and Processing 5500-EZ?

"Is anyone aware if the IRS office in Utah is open and/or accepting/processing 5500-EZ's? I have a few clients who still file paper copies and I want to have them switch to electronic filings. I don't want the forms to sit and potentially not be processed for many months."

1 reply   |    51 views   |    Add Reply

Stash026 created a topic in 401(k) Plans

CARES Act Allows Money Purchase Plans to Provide Distributions Before Age 59-1/2?

"Can a Money Purchase Plan adopt the optional provisions under the CARES Act or is it not until age 59-1/2?"

1 reply   |    42 views   |    Add Reply

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