hr for me

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hr for me last won the day on December 27 2016

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  1. Is anyone interested in finding out why it doesn't reconcile? I'd be concerned about an underlying problem unless it can be proven where the mistake on the 5500 happened. Too many years of reconciling trusts for 401(k)s that never allowed for even a penny's difference. But I do understand that investigation takes time and money. How big is the difference and is it too much or too little?
  2. have to agree my first thought was what QDROphile posted. It may be that the employee and his ex-spouse are going to have to work this out. Is his spouse also covering the child under an FSA or is she just responsible for the child care costs this year? A costly mistake no doubt.
  3. (asking more from a payroll standpoint) It sounds like you are wondering if the employer should have grossed up the amount of the 401k deduction (which is what your 2nd calc is showing) like they did the taxes (1st calc did not gross up for 401k deduction). The way they calculated it, they did not. Was this added to other wages such that there was actual $ for the deduction to come out of? If not, how was the 401k deduction paid for? I will say I have never seen an employer gross up for any % benefit deductions, just taxes.
  4. agree you could do it for next plan year, but it is possible that someone already accrued some rights for this year. And I suspect once they explain it to the employees, they will get smarter and spread their deferrals over the whole year to get the whole match, so not sure the employer will save that much except possibly for terminated employees.
  5. Is that employee an HCE? If so, you might have nondiscrimination issues anyway. Logistically, even if allowed, it would probably cost the same (or more) in fees and administration as having a small group dental plan open to all employees with the same policy. Like someone above said, you still need a plan, SPD, etc. What happens when another employee hears about it and wants the same choice? Are you really going to want to administer a lot of payroll deductions to a bunch of different dental providers each payroll period with different plan benefits? From a payroll side, this could get to be a nightmare.
  6. yes, earnings on pure after-tax contributions are fully taxable at the time of distribution regardless of how long they have been in the plan. The earnings never lose that taxability. If the contributions were made prior to 1987, they could be withdrawn separately from their earnings and the earnings would stay in the plan BUT be taxed when they were later distributed. Any contributions made after 1986 and later distributed had to be distributed pro-rata with earnings associated...The IRS got tired of employees taking out a fully nontaxable distribution. I still remember the "pre-87" and "post-86" basis buckets on our old mainframe program. It was one of those things we had to check regularly for anyone that had aftertax contributions or taking aftertax distributions and often we had to manually calculate the taxable part of a distribution! (I am majorly dating myself here.....I started in the 401k field in 1991 so some people still had both types of money and we were responsible to track the tax basis -- and you would still have to do so now if you implemented aftertax contributions so you would know how much of the source is taxable and how much has already been taxed.) As opposed to earnings on Roth 401k contributions where if you leave the money in the plan long enough the earnings become nontaxable along with the already taxed Roth contributions. Honestly it sounds like you are missing some of the very basic historical 401k concepts. It might be worth it for you to look into the CEBS certification-- especially the ones on Retirement plans that will give some basic, history, definition and knowledge that you seem to be lacking.
  7. It's not that the employer is trying to intentionally discriminate, but more the fact that many NHCEs don't participate at the highest levels possible, while more HCEs do (or at least contribute higher %s because they have more spendable overall income). And that poses an ACP nondiscrimination issue along with refunds, etc. You can advertise all you want to every rank of ees, but you will find the lower ranks just won't participate as much. There really just aren't that many workers at lower levels trying to "stick every available dollar into an after-tax retirement pool" especially now that there are so many private options to do the same thing. Why tie that money up in an employer 401k that has (possible) distribution limits ? This was VERY common in the 1980s/1990s and yes, you have to ACP test (match + aftertax). At the time, I would say only about 1/2 our clients offered the option. And many replaced their aftertax option with Roth when Roth 401k became available because truly it was a better option (if held long enough the earnings aren't taxable where in aftertax moneys they are always taxable) Plus you are adding a whole 'nother source of funds for the employer/recordkeepter to deal with -- possibly with its own set of fees, communication issues, loan/distribution rules, plus tracking and testing. I have to agree that most would find it unviable for the amount of possible participation. I suggest you research backwards to when this was more common prior to the mid to late 1990s. I worked directly on plans back then and did a lot of ADP/ACP testing -- it was required of every plan prior to the Safe Harbor rules. Honestly what you are considering loses the advantage of that -- you are trying to move backwards, which may or may not be a good thing.
  8. I agree you would possibly have nondiscrimination issues. I wouldn't try to use one without some strong backup of an consultant familiar with the many different possibilities and which might help you accomplish whatever your goal might be (and some legal advice/protection) -- rather than picking one of the internet. But I have seen them used well for professional development of current employees and dealing with work related personality issues. I think it is good to know the strengths and weaknesses and prefer MyersBriggs because that is what I am trained on and understand. But I wouldn't use it for hiring personally.
  9. Not sure if this is still true, but back in the day, there were some traditional IRAs that were "conduit" IRAs where they could later be rolled back into an employer 401k -- they were not allowed to comingle other money into them.....and others that were "non conduit" and could not be rolled back to a 401k but funds could be comingled. Don't know if IRAs still have that designation or not, but it is possible that his personal traditional IRA does depending on when it was opening and under what criteria -- and whether he comingled funds.
  10. Maybe I am being too simple here, but shouldn't Paychex's calculation be dependent on the compensation definition (and choices) in the plan document since the employer can generally chose differing definitions to base deferrals on - (the 4 section 415 definitions of compensation then 414s definitions plus 3 possible modifications under safe harbor plus other modifcations subject to testing)?
  11. One thing to check is if they have a POP (premium only plan - a simplified 125 plan that is very common with small businesses ) that allows for those health insurance premiums to be pre-tax without having a full 125 plan. That's about the only way I can think of outside of full 125 that would allow the premiums to be pre-tax deductions. It is possible they aren't calling it a Section 125 plan or say they are sponsoring a "125 plan" because they don't have other choices such as FSA attached, but it is still a 125.
  12. If the increase is significant, then yes. I haven't seen a definition of significant -- but it should be reasonable. What percent increase is the cost of coverage at the higher salary rate? I would also consider as an employer whether to "lock" the rate at the beginning of the plan year rather than switching premiums mid-year to avoid the issue unless you think you will have nondiscrimination issues for someone becoming an HCE soon after the beginning of the year but paying a lower amount.
  13. Are you self-funded? Or group-based? You might have more liability if you are self-funded to disclose since the employer is helping to calculate the premium...But I know of nothing you have to provide on the small group level. And I can't say I have ever had an employee ask this level of detail. There are articles like this: https://framework.gusto.com/how-are-health-insurance-premiums-calculated/ that talk about claims area, age, smoking of the group and richness of benefits, but I don't think he wants that. To tell the truth it sounds like he wants the actuarial calculations and I don't think that is reasonable and not something the insurance company would share with anyone but the State Insurance Dept to get the plan approved to be sold. Does he know that insurance companies have to do that? Sometimes there is no pleasing people like this. Plus does he not realize that he is going to have the same costs for any insurance policy he buys unless he goes with a co-op coverage like MediShare. Because he lives in the same place, is the same age and is either a smoker or not and then gets to choose the richness of his individual coverage. The only real difference is the employer will not be subsidizing part of it (but the gov't might)
  14. I agree with Chaz....the MSP rules don't want employers paying Medicare for the employees -- they want employers to keep these people on the employer plan. So no incentives can be given to opt INTO Medicare, including the employer paying the premiums through 125 (with the caveat of employers with less than 20 employees).