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Who's in the Doghouse!! He made a very interesting observation, which is that if his "business' " primary purpose is providing management services to 1 other business, then it is an Affiliated Service Group (the Management Company variety) and he would be employed. Of course no one has mentioned it, but if this CFO is earning his paycheck exclusively from providing CFO services to this one "client" (aka his employer) then he is a w-2 employee and they could be in hot water if challenged. For example, why the sudden change in status? But that is really the CPA's call, but I always mention to clients in these situations.

I agree. But the distinction in this case to me is an HCE is being given the option to continue making loan payments and not take taxable income while NHCEs are not given the same option. Sounds like a BRF failure to me.

I believe it includes all days that end in a the letter y.

Should be in the Participant Loan Program. Are other terminated employees given the option to continue repaying their loan after separation from service or does the loan become due and payable?

I know it is off topic a bit but it has been brought up. I worked for the IRS back in the '80s and one of the things we were trained in was looking for 1099-R people who were in fact employees. This is NOT something you can just agree to do. Too many people think if a person signs a contract saying they agree they are an independent contractor then they are one. That isn't how the law works in this area. You are either an employee or an independent contractor if you meet the definitions of either one under the law and no agreement can say otherwise.

Below is a quote from an IRS phone forum from September 7, 2012. My thought is you now have to follow Rev Proc 2015-28 to correct a failure to implement a deferral election. Note: A Plan Sponsor cannot avoid liability to make corrective contributions for the missed deferral opportunity by making its employees responsible for checking pay records to ensure deferral election has been implemented.

I disagree. No such thing as a 1099 employee, so the CFO would be a terminated employee just like any other employee. I agree. It is a BRF failure, and a failure to follow the terms of the document. Bottom line, can't be done in the manner proposed.

How is the auditor challenging the entry dates? Are they saying someone should be enrolled on their eligibility date because the payroll company can calculate immediate changes to deferral rates. I have had my share of arguments with auditors but this one has me scratching my head.

It is a nightmare. The client has an online portal for all things payroll and benefits related, but I don't really understand all of those details.

My thoughts exactly. At least it doesn't apply the deferral rate changes retroactively. I'm guessing that it's all handled in one computer program, so they only have to input the deferral change and date, but still ...

Personally, I would just sign up as a batch provider with EFTPS, get a "Reporting Agent Authorization" (form 8655) from the client, and make the deposit for them. After that, you would be prepared to handle the issue if it ever came up again. It is free and simple to do. I have never had a broker who was actually allowed to do a tax deposit if it wasn't done through their corporate channels. That could simply be because of the brokers I work with, but I have always been told that they are not allowed to assume that liability. As for deposit coupons, can you even do that anymore? I thought they were phased out after the electronic deposit requirement and after a certain point they would no longer accept coupons...

Q. How many people work at your company. A. About half.