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Caution. The Employer should not assume that FICA has already been applied. Check your records.

They are beyond the time period to deposit annual additions for the 2015 year, so the only way a 2015 contribution can be done now is under EPCRS. The SH contribution is required, so it definitely needs to be corrected. If it isn't corrected, the plan is disqualified. If the PS contribution was discretionary, I don't know if it can be corrected. Rev. Proc. 2016-51, Section 6.02(4)(b) says that corrective deposits are considered annual additions for the year being corrected, but the normal rules under Section 404 regarding deductions apply. With a correction being made now, I read that as you would allocate for 2015, but deduct in 2017. I'm not a tax person, but I would agree with you that they should not have deducted it for 2015 when it wasn't deposited.

If you intend for the SH match to satisfy both the ADP and ACP safe harbors, I would complete the document to reflect that both were intended to be satisfied. Your document provider should be able to help you with that. As John noted, it is possible to have a safe harbor match formula that meets the ADP safe harbor requirements, but not the ACP safe harbor requirements. I wouldn't want the document to say we did not intend to satisfy the ACP SH if we do.

NQDC is always reported via W-2 unless it's a death benefit paid to a beneficiary, then 1099R is appropriate. There should be no FICA/Medicare issues because that should have been applied along the way - unless amounts did not vest until just before payments were to begin (or it was a DB SERP where the PVAB was not reasonably ascertainable until commencement). Regardless, it is more a payroll function than a TPA or trustee/custodian function as HR stated.

What about the improved ability to receive in-service distributions? SH source can't use 2 yr/5yr rules.

I wonder. lets say the formula 50% of deferral and that was changed to 25%. and the HCEs deferred the max, so are finished. a side effect, for all practical purposes, is the formula over the whole year, because of the way things worked out, the HCEs received a 50% match and the NHCEs, averaging things out will receive 33%. If that had been my formula for the whole year it would fail BRF, because no NHCE were in the 50% group. I don't think the fact changing the formula itself is a problem, but the added fact the HCEs maxed out might add a wrinkle. or worded another way, we changed the formula, reduced it and the only people it effects are NHCEs. lets say they follow the same pattern year after year, that begins to smell bad.

You won't see possibilities of a prospective amendment in the plan document. When making a determination, you would typically consider two things: 1) Is there a prohibited cutback (which it's clearly not); and 2) Is the amendment discriminatory in nature with respect to current and effective availability of benefits, rights, & features. With respect to BRF, (like you said), even if the HCEs have already maximized their deferrals and received all the match they're going to receive; such an amendment would only only fail the ACP test (and perhaps lead to a discriminatory rate of match). Obviously, in ACP testing failures, those excesses may be refunded to the HCE and must be forfeited when testing for discriminatory rate of match. With these two things; I cannot foresee an issue with the amendment timing for this type of amendment. Even if only HCEs deferred during the first part (even though NHCEs had every right to do so), I don't think the amendment would fail to meet these two standards. Others may have a different view. Good Luck!

I would not expect the outside administrator to be able to do the w-2 withholding calculations without being provided at the very least the w-4 and the year to date FICA withholding amounts (in case the limit has already been reached). To me, this is 100% a payroll function and my experience matches that of EBECatty. I would not expect the administrator to do either a 1099 or a W-2. I don't see how this would be a good process to outsource at all, nor do I know of any companies that do so (especially since the administrator is giving you bad advice on how they could do it if you force them to do so)

1-104(a)(4)-5(a)(2) addresses the timing of a plan amendment and whether it's discriminatory. If you have a chunk of NHCEs leave active status and then you do an amendment that just improves vesting for the actives, you should at least consider this requirement. (2)Facts-and-circumstances determination. Whether the timing of a plan amendment or series of plan amendments has the effect of discriminating significantly in favor of HCEs or former HCEs is determined at the time the plan amendment first becomes effective for purposes of section 401(a), based on all of the relevant facts and circumstances. These include, for example, the relative numbers of current and former HCEs and NHCEs affected by the plan amendment, the relative length of service of current and former HCEs and NHCEs, the length of time the plan or plan provision being amended has been in effect, and the turnover of employees prior to the plan amendment. .....

I always wonder about this question. All the NQ plans I've encountered with outside recordkeepers, rabbi trustees, or employer-owned custodial accounts usually run the distributions through the employer's payroll. Often I'll see the employer request a check from the trust/account payable to the company, and the company in turn issues a check to the employee through the company's payroll. Or sometimes issues the check first and then requests reimbursement from the trust or custodial account.

Our VS document has a provision that automatically rescinds the designation of the ex-spouse as beneficiary upon divorce, unless the participant makes a new beneficiary designation naming the ex. It's not your question, but does their plan document have a similar provision? If it does and the ex-wife is out of the picture, who would be the beneficiary?

If the plan actually covers only NHCEs, you are free to do just about anything. If group C isn't deferring, then I would just exclude them. Other than that, I would use a plan with everyone in their own group. You can always "group" them in the way you have above.

You mean something actually can be deleted from the interweb - PERMANENTLY? Doesn't that go against a fundamental law of nature?

Depending on the circumstances and the terms of your cafeteria plan, you may be able to adjudicate the claim manually and, if the claim if for a qualifying expense and was timely submitted, reimburse this employee under the FSA without using the TPA. You and your HR department should speak with counsel as resolving these issues are highly dependent on the facts.

just for grins at the 2005 ASPPA Conference the IRS individual responded to a similar type question. of course, such responses don't necessarily reflect an actual Treasury position. What is really being asked here is “What does it mean for an employee to be employed on the last day of a plan year?” Consider the following examples: July 31, 2005 falls on a Sunday. If an employee's last day of work was on July 29, 2005 and the plan sponsor is closed on Saturday and Sunday, would the employee be considered to be employed on the last day of the plan year ending July 31, 2005? Employee terminates employment on February 23, 2005 and is paid two weeks unused vacation pay on his last day of work. Would this employee be considered to be employed on the last day of the plan year ending February 28, 2005? Following a hectic tax season, a CPA firm closes from April 16th through May 5th. An employee works on April 15 but does not return to work when the company re-opens in May. Would this employee be considered to be employed on the last day of the plan year ending April 30, 2005? December 31, 2004 was New Year's Eve and many businesses were closed that day since January 1st was a Saturday. If an employee's last day of work was on December 30, 2004, would the employee be considered to be employed on the last day of the plan year ending December 31, 2004? These questions were answered by an IRS representative in the following manner at the fall 2005 ASPPA Conference: Being “employed” on the last day of the year is not the same as working on the last day of the year. Employment is a “relationship” with the employer. If you are on vacation and someone asks you where you work, if you are still ‘employed,’ you have an answer, even though you are not actually working during the vacation period. So, if 12/31 is a Sunday and it is a business that is only open Monday to Friday, unless someone has been terminated from employment as of that day, they are still employed even though it is not a work day. So, your example 1: as long as the person wasn't terminated, he is still employed on 7/31 even though it's a Sunday and not a work day. Example 2. Employee is terminated prior to the last day; he is not employed on the last day regardless of how much money he is being paid upon termination. He is no longer employed by the firm as of 2/23. Example 3. The question is always “is he employed” during that period, not “is he working.” (BTW, seasonal employee rules were never issued, so let's not deal with “seasonal employees” here—besides, I don't think a three week shut down qualifies as “seasonal”). Let's just assume that everyone is on vacation. Are they fired (terminated) on 4/16? Unlikely. They are basically on a company wide vacation; they are still employees; they are supposed to come back on 5/5. Therefore, they are still employed as of 4/30. Example 4. Basically the same as opening comment about 12/31. Here, the company is closed 12/31 and last day of work was 12/30. None of that matters; what matters is “was he still employed on 12/31,” and the answer is yes (unless he was actually terminated on 12/30). (IRS Q and A #32, Fall 2005 ASPPA Annual Conference)