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Message Boards Digest

September 14, 2020

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

Cynchbeast created a topic in Retirement Plans in General

Mechanics of CARES Act Loans: So Many Cogs, Axles, Gears and Flywheels Turning

"Client wants $100,000 loan, per CARES Act. This is the first for us and not sure how the mechanics work. [1] If the participant chooses to defer payments and the first payment would normally be due in October, 2020, are payments deferred only until January, 2021, or do we defer all repayments til a year from October (ie October, 2021)? [2] I understand the Act allows for deferral of payments for 12 months, but I'm not sure what that means, because I believe one also can extend the term of the loan. Would the participant make double payments after the 12 months, until all of the deferred payments are paid, or would they just be tacked onto the end of the loan? [3] Do I prepare an amortization schedule as I would normally, starting in October, 2020, and re-amortize when they begin payments, or do I start the amortization schedule with the date they are to start payments? [4] I understand interest accrues while the repayments are deferred. Is this then added to prinicipal before amortizing/re-amortizing the loan and spread over the entire 5 years? As you can see, I'm extremely unclear at to the actual mechanics of the loan repayment, in particular how do we write the note and how we amortize the loan."

2 replies   |    70 views   |    Add Reply

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

DB Participant Terminates with 800 Hours of Service

"A DB plan has a 1,000 hour minimum service requirement in order ito enter the plan and then to be eligible to accrue a benefit for the respective year. Once an employee enters the plan, though, even if hours of service dip below 1,000, the participant will accrue a benefit for that year (but not any additional vesting for such a plan year because a year of service for vesting purposes is a minimum of 1,000 hours of service). What If a participant in such a DB plan terminates in the middle of a year with only 800 hours? Would he or she accrue a benefit for such a final year of employment?"

3 replies   |    68 views   |    Add Reply

SSRRS created a topic in Form 5500

Investing a DB Plan in Real Estate

"I have seen statements on this forum that a 5500-EZ filer that answers 'yes' to having participant loans creates an audit flag. On the 5500 Schedule I, there is a question as to whether the plan held a part of the assets in real estate. If the plan answers yes to that question, does it create an audit flag? If so, would it be advisable to stay away from investing (DB plan assets) in real estate to avoid this (even though clearly it's legal to invest a portion of the assets in real estate with the appropriate diversification, it being less than 20% of the assets, etc.)?"

2 replies   |    49 views   |    Add Reply

MWeddell created a topic in Retirement Plans in General

Good Research Resources on Puerto Rico Qualified Retirement Plans?

"Like most of you, I'm in the mainland U.S. and seldom work on plans (either dual-qualified or stand-alone) that cover employees from Puerto Rico. But I occasionally need to answer questions about those plans, especially regarding coverage and non-discrimination testing. Are there any good resources available?

From 2018, I'm aware of this document:

<https://documents.popular.com/pdfs/PFS/02_Puerto_Rico_Qualified_Plan_Discrimination_Testing_and_Reporting.pdf>"

1 reply   |    40 views   |    Add Reply

BG5150 created a topic in 403(b) Plans, Accounts or Annuities

Nonelecting (Maybe) Church Plan Wants to Quit Filing 5500s -- A Problem?

"We have a church plan that was established way back in the '90s. The initial plan document says the plan is 'Not Subject to ERISA.' However, they've been filing 5500s throughout. What's not clear is if they ever formally elected (as an attachment to the 5500) to be subject to ERISA (or filed for a determination letter with that attachment). What if they're not subject to ERISA? Can they just stop filing 5500's, and when the 'where's your filing?' letter comes, just write back and say, 'we don't have to file because we aren't subject to ERISA'? I understand that, if they ever elected to be covered by ERISA, the election was irrevocable."

0 replies   |    25 views   |    Add Reply

BG5150 created a topic in 403(b) Plans, Accounts or Annuities

Why Would a Church Plan Elect to Be Subject to ERISA?

"Why would a church elect to have its plan subject to ERISA and thereby subject the plan to all sorts of requirements?"

1 reply   |    50 views   |    Add Reply

QDROphile created a topic in IRAs and Roth IRAs

Roth 5-Year Rule and Transfers Incident to Divorce

"Grey divorce (both over 59 1/2), Roth IRA has aged 5 years, Roth IRA balance is divided incident to divorce and spouse's 'new' Roth IRA is the transferee of the Roth distribution. Does the spouse's Roth IRA start the 5-year clock anew or does it benefit from the 5-year maturity of the source Roth IRA? I am not surprised the the regulations under IRC 408 and IRS publications do not address this, but I don't find much secondary material venturing an answer. One does, and appears to go with the spouse Roth having the benefit of the age of the original Roth, drawing from the rules relating to dividing basis in an IRA transfer."

1 reply   |    33 views   |    Add Reply

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