Leaderboard

They can invest it any place a qualified plan can invest the cash as long as it is prudent. In many ways if a Profit Sharing plan can invest the cash in a given place so can an ESOP. There aren't special rules I am aware of for ESOPs. It is the "prudent" standard that could get tricky. If the cash is going to be used to fund payments and the share are being recycled can there be a justification for more short term investments for example and still be prudent? You can get a pretty good debate with that question at an ESOP conference.

Inflation is affecting all of us.

The IRS is referring to ERISA-covered plans (i. e., practically all SIMPLE IRA plans), for which the general rule is that elective deferrals must be remitted to the plan (to participants' IRA's in this case) as soon as they can be segregated from the employer's general assets. That will almost always be much sooner than 30 days after the end of the month of the contribution. Small plans have, as you note, a safe harbor exception to the general rule.

I don't deal with these plans, but it could mean simply that the contribution to the SIMPLE does not count as an IRA contribution and so a full IRA contribution can also be made. The plan/no plan issue (as well as income) affects deductibility, not amount.

Nope, and Google doesn't have a definitive answer either.

The EOB has easily been the most valuable resource over the course of my career thus far. I use it on a daily basis. I have found the electronic version of the EOB a little clunky and difficult to navigate, but once you get where you're going, the content is excellent. As an aside, am I the only one wondering what a "401(k) Split Plan" is?

Wow, what a bizarre set of circumstances. Based on the info re provisions that you have provided, it seems to me that it would technically be a prohibited cutback if you don't make the "required" contribution to these key employees. The IRS fix-it program explanation, while very helpful in general, clearly does not contemplate this highly unusual situation. So, IMHO, you would have an operational violation of the plan terms if this contribution is not made, and I don't believe compounding it with a prohibited cutback is a wise course of action. Bit the bullet and make the contribution. You could file under VCP, and perhaps the IRS would approve it, but the time and expense may not be worth it, particularly if it is rejected by the IRS. If it is a cash flow issue, perhaps they could take a loan to make the contribution, and then as Bri suggests, cut back their deferrals to repay the loan. If the loan is repaid fairly quickly, the interest cost will be small.

Let me just add that deductions under section 404 must also be "ordinary and necessary" business expenses that are deductible under section 162. It isn't likely that contributions for the benefit of INC's employees are ordinary and necessary for LLC or vice versa. Therefore, unless some unusual facts are present, each employer's return should claim a deduction only for the cost related to its own employees.

About code 3D, the 2022 instruction does not mention § 403(b), but the 2023 instruction will include § 403(b). “The list of plan characteristics codes for Lines 8a and 8b of Form 5500 and Lines 9a and 9b of Form 5500–SF are being amended to add ‘‘403(b)’’ after ‘‘403(a),’’ to read as follows: ‘3D: Pre-approved pension plan—A pre-approved plan under sections 401, 403(a), 403(b), and 4975(e)(7) of the Code that is subject to a favorable opinion letter from the IRS.’” Annual Information Return/Reports [final forms revision], 88 Federal Register 11984, 12000 n. 49 (Feb. 24, 2023), available at https://www.govinfo.gov/content/pkg/FR-2023-02-24/pdf/2023-02653.pdf.

The Internal Revenue Manual is a set of directions and instructions addressed to IRS employees. Nothing in the Manual is a rule that applies to a taxpayer. And nothing the Internal Revenue Service or the Treasury department writes can undo an Act of Congress.

Only had to do it once, cited the reasoning (unpaid bills, didn't provide census info to complete the work), then I regret to inform you that, effective immediately, I will be resigning as the actuary for the Plans listed above and will no longer provide any services related to the Plans. You should be aware that there are actions associated with your Plans that have upcoming deadlines. We will not be responsible for any missed deadlines or for work requested after the date of this letter.

Exactly, refer to service agreement, stating that in accordance with whatever section(s) or paragraph(s) thereof you are providing the required notice that you are terminating or resigning from the engagement (again, whatever wording your SA used) effective a specific date. If you have any outstanding deliverables for which you've been contracted and paid, or if there are any outstanding invoices for work already delivered, you can address those situations as well. You need not state a reason, but could say "we have made a business decision..." or something to that effect as the lead in. You never like to do it but sometimes it is better to cut and run. Good luck.

Avoid the word "fire". Use the word "resign". Be polite and direct. If there is any work in progress, make sure you address it.

I am pretty sure clients keep nothing we send them. It's very annoying.

We generally say something to the effect of, "Sure, we'll be happy to forward those. Would you please tell me why you need them?" Honestly, these days when it is as simple as attaching a PDF to an e-mail, we don't find it much of a burden. Maybe we are just lucky that we don't get too many of these requests. Wasn't as easy in the old days - then these were a thorn in the side.

Typically we'll forward an email where the documents were already provided and ask if they need any help with something.

I had a similar situation whereby a client mentioned he switched accountants and the previous accountant was going charging him a fee to release any paperwork and the new accountant cited Circular 230. I assume that was just to scare the guy off.