"I guess I'm asking a question of other TPAs that primarily partner with recordkeepers. And maybe I'm being overly paranoid, which is very likely.

It seems that the majority of the recordkeepers we work with have special forms for processing CRDs and CRLs, and if the plan sponsor does not 'opt in' to using these forms they will process distributions in the 'normal' manner regardless of the participant's status as a qualified individual. We have some clients that feel their plans offer sufficient distribution options already and do not want a new special inservice distribution option, so they don't want to 'opt-in'. Now a participant who terminated 5 years ago wants to take a distribution as a qualified individual under the CARES Act because they were laid off from their current employer. Being savvy enough to know that they should be permitted to waive out of the withholding are told by the recordkeeper that because the plan sponsor did not opt in to allow CRDs, they will be subject to 20% mandatory withholding.

At this point it should not be the plan sponsors decision, should it? I understand that the Plan would need to be amended to permit a qualified individual who would not otherwise have a distributable event under the current plan provisions to take a distribution if say for example they are still employed with reduced hours and are 30 years old.

But does the Plan have to be amended to permit a qualified individual who has a distributable event to be able to waive out of the withholding? Isn't that expressly permitted in the Act?

Are other TPAs telling their clients just to opt in so that qualified individuals are treated correctly under the Act? Could a qualified individual who does not have their withholding applied correctly make an issue for the plan and require a penalty to be paid for not being able to waive out of the withholding?"

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"Health plan was amended effective 1/2019 to provide for a change in the plan sponsor. New plan sponsor is an affiliate of the previous plan sponsor. Plan name was also changed accordingly. Is there a form that needs to be filed with the IRS notifying of the change in plan sponsor?

I have come across Form 8822-B (Change of Address or Responsible Party) but this does not seem to be exactly on point. This came up as a result of the new plan sponsor filing for an extension to file Form 5500."

"I was employed for all of 2019 with my current company. In February of 2019, I received a lump sum bonus from my employer: $50,000. I was NOT yet enrolled in my employer's 401K and therefore no 401K contribution was made from my bonus. In March of 2019, I joined the 401K plan. Does the bonus of $50k in February count towards the 'income eligible for 401K' for 2019, given that I enrolled in March? I don't expect that the contribution will be backdated to the bonus check. But when I contribute 5% of my annual compensation to 401K in my Fidelity401K system, it's 5% of some amount -- I'm not sure which -- is it the total annual compensation including the bonus or the only the compensation received after the enrollment date?"

"Employee will 'retire' from employer soon but will still do part-time work (less than 20 hours/week). Is she eligible to get a distribution and then make a rollover into an IRA? Her 401k is expensive."

"Our company is transitioning from a SIMPLE to a 401K plan. Through a series of events by Fidelity, we were not able to start the plan on January 1 but instead have a live plan starting April 1. For a variety of reasons, we would like to keep the SIMPLE for the balance of 2020 and delay the start of the 401K until January 1, 2021. Fidelity seems to indicate this is not doable. Can a delay in starting a 'live' plan be done reasonably?"

"A participant terminated employment due to COVID at the end of March. She has a loan outstanding and wants to take a full distribution. Once the full distribution is processed, should the loan be offset? I realize that for regular distributions, the loan would be offset once a full distribution is taken. However, can she freeze the loan until 12/31/2020 because she was affected by COVID?"