AlbanyConsultant

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AlbanyConsultant last won the day on January 2 2015

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About AlbanyConsultant

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    http://www.crepen.com
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  1. I can't believe I had forgotten about the S-corp owner restrictions... wow. Thanks for the reminder. So maybe that's the problem. That situation doesn't (hopefully) come up too often anymore. What about where the loan was only taken recently? When does non-payment create a PT, if it does at all?
  2. This came up because a local CPA asked our advice for an audit his (not ours!) client is going through. The owner of the business (an s-corp) took a loan that satisfied all the 72(p) loan provisions when he took it out. He never made a single repayment, and the CPA is still carrying it as a plan asset for the face loan amount. Oh, did I mention that the loan was taken 20+ years ago? No doubt this is bad. But we in the office can't agree on where the badness starts... Is this a PT? Where? When? Is it different because it's an owner? I've heard that they have a "higher standard", but unless this owner is a fiduciary (which of course he is), I don't think that's generally true. Thanks.
  3. I have a client who is just now realizing that the safe harbor match true-up provision they've had in their plan for almost a decade is "costing [them] money" by making them do more match than just what they calculate weekly (I suspect a new bookkeeper). They want to do a mid-year amendment to remove the annual true-up of the safe harbor match effective ASAP. I don't see where this neatly fits into one of the prohibited amendment boxes, so I'm thinking this might not actually be too bad. It feels wrong, but maybe that's just me. If this is OK, would you keep the true-up through a date 30-days in the future (maybe April 30)? Thoughts? Thanks.
  4. It seems to be about three years since this topic has come up, so I was just wondering what everyone's current opinion is regarding making the deposit of employer contributions timely. Obviously, we'd prefer if the money was actually deposited into the Trust by the deadline date. But we all have clients who, for one reason or another, aren't ready to make the deposit until the day before the deadline and still have to mail a check somewhere. What's the best current guidance we can give those poor souls? From searching previous threads here, I've found: There’s a footnote to the 1996 DOL deposit regulations (the regulations that relate to the definition of “Plan Assets”) that gives an example of an employer mailing a check to the plan counting as the money being segregated as of the day the check is mailed (provided that the check clears). This example relates to employee deferrals and doesn’t mention employer contributions. IRC 7502 gives general guidelines about using the postmark date, but it explicitly says that this section does not apply if you’re making the deposit to “any court other than the Tax Court”. There are apparently several Private Letter Rulings that use the mailing date as the deposit date for their various scenarios. There is at least one instance, however, where the postmark date was rejected because the employer couldn’t prove what was in the envelope they postmarked. Some of these threads are over a decade old, so I'm hoping that someone has gotten a clearer answer by now. Thanks.
  5. Thank you!
  6. Working on an s-corp where the two owners deferred $25K in 2016. They are both over age 50, so they'll get $1K (+ earnings) refunded by 4/15/17. Fine. This plan also has an integrated profit sharing that they like to max out. I know that these excess deferrals would count in the ADP Test (if the plan wasn't a safe harbor 3%), but could they affect the profit sharing? Do they count towards their individual 415 limits? Thanks.
  7. Because... they're not due yet? That's our viewpoint, too. But it's nice to know so we can answer the question. :)
  8. I've got a participant's CPA who is saying that because we haven't electroncially filed the 1099-Rs yet, if his client electronically files their 1040 it will bounce because there is no 1099-R at the IRS to match it up to. I don't think I've ever heard of this before - is this is thing? Thanks.
  9. Thanks, everyone.
  10. A question similar to this started quite a debate at the ASPPA Annual Conference a few months back, but I don't think there was ever a clear answer... Small plan with immediate eligibility, the participants are the owner, his son, and one non-related worker. The son was not employed when the plan started in 2015 (he came aboard in 2016) and has never worked more than 1,000 hours per year. The company is expanding and now wants to change the eligibility provisions to have 1 Year of Service (1,000 hours). If the plan provision is changed to require a YOS, is the son grandfathered in the plan, or is he now considered an excluded employee (i.e., no future contributions) because he has not met the new eligibility requirements? Could the resolution (if the adoption agreement itself doesn't give you the flexibility to do it) be written to grandfather him in? Is that discriminiatory? If the son is terminated (and hopefully paid out) before the change, does it even matter? Thanks.
  11. This has to be pretty common - the harried HR manager puts the deferral amount on the wrong line of the template on the product platform's website so that Particpant A doesn't get his $50, but Participant B does. We find it months later when we do our annual reconciliation because neither A nor B read their quarterly statements (or any of the gazillion notices, but that's for another day). Is this a "lost earnings" situation? On the one hand, Participant A did not have the access to his deferrals, so he was denied use of the money. On the other hand, the Trust was not shorted anything, and the employer did not have use of the funds. What takes precendence? I'm trying to get some outside opinions because I find that people in my office are doing it both ways, and they are passionately defending their side. Just as importantly - how would you correct it? Transfer the overage from B to A? Have the plan sponsor drop in an additional amount for A and short B's next deposit? Have you had one method work consistently better? Thanks.
  12. A client 'fessed up and said that they had given a participant $2,000 in severance pay (that isn't for the payment of unused sick or vacaton time - they actually used the word severance). The participant deferred exacty 10% of gross pay, so while it's still being checked, I'm pretty sure that they took deferrals from the severance, too. Let's say this is the case. Obviously, that is not allowed - if it's not eligible for plan compensation, you can't defer from it. So what is the authority to return those deferrals? It's not a 402(g) failure, and 415 wasn't violated. It's not an excess deferral. What is it? Mainly, I want to know for (a) timing, (b) taxation, (c) earnings calcluations, and (d) to look smart when I tell the plan sponsor. Thanks.
  13. I think that's it. Thanks!
  14. I've got a plan that calculates the employer match on a quarterly basis, and in the back of my head I seem to remember a specific timing issue that relates to when that deposit has to be made. Or maybe I'm mixing it up with something calculated per payroll having to be deposited by the end of the quarter...? And because I don't know what I'm exactly looking for, I can't find anything that makes sense. can anyone figure out what I'm talking about and half-remembering? Thanks.
  15. Hi. I have a 401(k) plan that has terminated effective 12/31/16. The business is still continuing, but the plan is winding down (calculating final employer contributions, testing, etc.). A participant has asked for an in-service withdrawal. Presuming that if the plan were not terminated she would meet the plan's criteria to take one, should be allowed to? I don't see anything that specifically addresses this in our document (Datair) or the regs. Thanks.