Leaderboard

No wiggle room. No amendment, can't treat it as optional withholding. Or, what he said.

If you are relying on the average benefits test to satisfy coverage, remember that the classification must be reasonable. Classification by job title is reasonable but if the IRS finds that you have a de facto classification by name or other unreasonable method it could be disallowed. CuseFan - I think "TRA" refers to the Tax Reform Act of 1986 and "offset" as in an offset plan, where the benefit is reduced by an amount integrated with social security. I'm going to assume that offset plans were added by TRA '86 - it sounds right to me but I wasn't around back then. I assume you already looked at a cross-tested DC/DB combo design? Usually that would be more efficient if your goal is to maximize the benefit for the owners.

There are two answers - of course. In our experience with the DOL is that you must go back to the beginning of time (and in one case, that was 12 years). Our advice (after explaining the DOL's position, it to go back at least past the open years (4 years). But if it was "significant", and the DOL get's involved, they may require more. As far as what you do for the client, that's your business decision.

I would correct the things for the period you were hired to work on. And give them a letter advising them of the issues and your concerns. Since you haven't reviewed the prior years, you don't really "know" there's an issue. Our engagement says we're under no obligation to audit or review prior years. If they want to fix it, they can hire you to do so. If not, it's not on you. Don't make their problem your problem.

Ugh. When you say it is your first year, does that mean someone else in your firm has been doing it and now it has just passed to you, or it came over from an entirely different TPA? If the latter, then I'd be inclined to make it the client's decision - we'll fix for 2019 and 2020 - for all prior years, they should be fixed, and I'll do it (for a princely fee), but if you choose not to do it, you are liable for the consequences. Alternatively, if they refuse to fix, give them their walking papers. How big a plan, and how much interest might this turn out to be - lots, or "not too bad 'cause it is only 11 participants" or something like that? These types of situations make me question my career choices. I should have been an optometrist!

An accountant just explained it to me - as Luke says, if he has earned income for the year, he can get a contribution and take a deduction. But if he uses his prior losses to offset profits in the current year, then he would not have earned income. So it depends on how the prior losses are used, if at all. It actually makes perfect sense. The original question said "... if he has net earned income for the year" and the answer is clearly yes...if that clause is correct. But if he had profits that were offset by prior losses then he would not have earned income for the year. It seems that either 1) the question wasn't asked properly, or 2) the accountant is wrong. As is almost always the case, ask "what income is s/he paying self-employment tax on?" and use that number as a starting point.

One other thought on this - be extra diligent to ensure the security of the inmate and the account. Inmates are typically in a cell with other people, or in some instances there might be as many (like 40) of them in a large bunk room. And there is a constant concern of other inmates stealing your mail and going through your belongings. So if you get a completed form back telling you to deposit the money into a bank account, you need to be sure that is legitimate.. You need to make sure any instructions you are receiving are actually coming from that inmate. So maybe the best way to handle that is to reach out to the prison family advocate for that facility or directly to the warden's office and ask them to monitor the process and make sure the information is actually getting to the inmate and that the inmate is really the person you are dealing with. LOTS of shady stuff goes on..

Doesn't this mean that if an employer so chooses, the plan must be amended at some point?

Rev. Rul. 54-51 requires that for the life insurance to be "incidental", the policy must be converted to a retirement income or distributed to the participant no later than the normal retirement date under the plan. Rev. Rul. 57-213 clarified that the life insurance policy may continue beyond the normal retirement age, provided the participant does not elect to retire. I doesn't matter if they are taking in-service distributions or RMDs provided they continue to work.

Depends. Does the letter say "Form 14568" at the top and have a VCP user fee tucked inside? https://www.irs.gov/retirement-plans/correcting-required-minimum-distribution-failures You can also try your luck with requesting a waiver on Form 5329. They might grant it, they might not. See the instructions for "Waiver of tax for reasonable cause" here https://www.irs.gov/pub/irs-pdf/i5329.pdf

This is our understanding of it: Because of the extensions provided by the IRS, the deadline to make loan repayments due on or after April 1 (without running afoul of the deemed distribution rules), is extended to July 15. This applies to all loans, not just loans to Qualified Individuals which can enjoy a longer suspension period under the CARES Act. With maximum use of regulatory cure period provisions, a participant can make up any missed payments by December 31. For example, if a “non-qualified individual” stops making payments any time during the period of 4/1/2020 through 7/15/2020, it’s treated as if the payments stopped during Q3 2020, thus making the end of the cure period 12/31/2020.