Site's been down for about eighteen hours now. Anyone know what what?

I have an ee whose adult dependent age 23 had gotten a new job on 3/22/2012. Yeah!

Employee now wants to drop adult child dependent on date of new job;i.e. 3/22.

Let's assume medical eligibility for dependent is later than date of hire e.g 4/1/2012

What type of documentation do we need for life event change?

Is the life event date : 1) date of new job or 2)date when adult dependent <age 26 get s enrolled in new employer's plan?

Thanks

Lexy

It's Friday afternoon and this one is giving me a headache. Two 401(k) plans of the same employer need to be aggregated to pass 410(b). Both plans have identical integrated PS allocation formulas. For 2011, the only PS contributions were small amounts resulting from the client depositing slightly more than the SH match during the year. The % PS allocation is slightly higher in one plan than in the other. Is general testing required? B,R,F?

Here is hoping we are all safe today, unless of course the 13th on a Friday does not spook you. We have a strange question. Our hardship distribution forms permit a participant to elect to have NO withholding on the distribution.

IRS Form W-4P permits an election to have no taxes taken out of a nonperiodic distribution. The instructions indicate that if there is no form submitted the taxes must be withheld.

If no W-4P is attached but the distribution form electing no withholding is signed, is that enough or does the participant have to have to W-4P accompany the distribution request?

Variation: we have grossed up the hardship for taxes; do they have to be withheld at the time of the distribution?

Are after-tax contributions required/allowed to be withdrawn at anytime regardless of the plan document type (custom vs. pre-approved document/prototype)?

Ok this is a stupid question but i can't seem to get a hold of anyone at the number that's on the 8554-EP form. I am trying to renew since now since my ss# ends in 7-8-9. I'm doing it on pay.gov but when you fill out the 8554 online it gives giving me a message that says to double check my enrollment number. i am using the one that is on the enrollment card that i received. 0000** (4 zeros and your number) however when i look on the irs website under the list of approved ERPAs it's 6 zeros 000000**. Which one is correct, it gives me the same message for whichever one i put in so i think i am just paranoid and can use either one

Just want to know what everyone else is using.

Thanks

the information below may make it clear that it may be necessary to consult with CPA of plan sponsor

with that said, i have data for a partnership:

this is a takeover case

I am not sure if the partnership is taxed as a partnership or an S corp (as of yet)

The two partners have equal shares (though I think it is 46% each) of company.

One of the partner's page 1 of 1040 for a prior year is as follows:

W-2 shows 194,146 (sposue included too) where it is itemized that of that amount a total of 63,235 is w-2 from the partnership. This additional W-2 from partnership only appears this one year.

My understanding is that if a partner receives W-2 then it may be taxed as an S corp

The 1040 shows scedule C business income of 11,511 (this may have no relevance to the partnership)

Line 17 of 1040 (which includes income from Schedule E from partnership) shows income of 174,784. If it is taxed as a partnership then this may include non passive income and/or passive income, guaranteed payments, and perhaps self employment income (all part of schedule k-1). If it is an S corp than I believe this is all pass through income not earned income for pension purposes.

If I add the W-2 comp from company and the Schedule E income the total is 238,019. The SE deduction is 4,869 (being so low it makes me think that some of the income may be passive income) and the pension deduction is 115,000.

So the net income is 238,019 - 4,869 - 115,000 = 118,150. Of course I am not even sure if this is close to what the earned income should be as of yet.

The valuation for that same year shows plan comp of 111,002. Surprisingly not too different from calculation, but nontheless doesn't solve much.

And finally, my understanding of deduction allocation is that the deduction on behalf of commonlaw employees is shown on 1065 if partnership or 1120S if S corp and the deduction for the partners on their return is split 50/50 since they have equal share in partnership. And the allocation for partners can be revised if they sign an agreement to do so.

Any thoughts of above preliminary analysis?

thanks

Rev. Proc. 2007-44 notes that sponsors must adopt "good faith" interim amendments. The IRS has informally noted that interim amendments can be "corrected in final" during the remedial amendment period, during a determination letter review. What exactly does "corrected in final" mean, given the IRS's usual position that there is no such thing as a scrivener's error and that sponsors are subject to the language in their plan document?

Thanks.

We had an adopting ER of a plan take effect 1/1/2011. There are two 5% owners of the adopting ER, but they have no ownership in the plan sponsor's business. Are they Key/HCE in the plan? I think the answer is yes. But, since they have no ownership in the plan sponsor, maybe not?

Thanks

We have 1 person LLC 401(k) plan and earned income for the owner is $25k. She wants to make a 401k contribution, but she is a 12.5% partner in another partnership where her portion of the "earned income" is -$90,000, which will offset the $25k from the LLC that sponsors the 401(k) Plan. Does this loss preclude her from making a 401(k) deferral?

I'm curious to know if an Executor has to take a RMD prior to placing IRA assets into the estate account. In this instance, the deceased named his beneficiary as his estate but then specified that 100% of his IRA go to specific charities. He died in January, 2012 and hadn't taken a RMD for the year. Clearly the easier route would have been to name the charities directly as beneficiaries and have them deal with the RMD.

I assume the IRS wants the RMD in the year of death, the question is how and when. Should the RMD be taken prior to or after assets are placed into the estate account? Are there tax consequences either way?

Here are the facts. The plan is sponsored by a Partnership. The Partners generally earn less than the annual compensation limit, so their "compensation" is Net Earnings from Self Employment (NESE) and is not determined until after year end when their K-1's are being completed. The Partners all sign 401(k) deferral elections prior to year end. The Employer contribution each year is a standard Safe Harbor Match formula (100% of the 1st 3% of compensation deferred and 50% of the next 2% of compensation deferred) deposited per payroll with no true up at year end. The staff's (all NHCE's) contributions 401(k) and Safe Harbor Match are deposited with each paycheck they receive throughout the year. Several Partners (mostly HCE's) contribute their 401(k) deferrals and Safe Harbor Match during the year, but many wait until the calculations are performed after year end so their exact contributions due can be calculated based on their NESE. This raises several questions:

• Can Partners contribute matching contributions where the formula is based on compensation (or deferral amounts where a percentage of compensation is elected) throughout the year from draws or must they wait until after year end to make contributions because that is when their compensation (NESE) is determined?

• If the Partners were to wait until after year end to contribute each of their Safe Harbor Matching contributions would be based on Annual Compensation whereas the staff's Safe Harbor Matching contributions were based on the staff's pay period compensation. Since most of the Partners are HCEs and most of the Staff are NHCEs, does this create a discrimination issue? Or not, because the Partner's pay period is only once at year end?

• Assuming the Partnership wanted to amend to an Annual Match (or Pay Period with True-up) can this be done after the year is over or mid-year in the following year (provided the Safe Harbor Notice is updated) since the amendment would only by increasing NHCE's benefits?

• Alternatively, if the Partner's contributions are made during the year from their draws, would the match also have to be calculated per pay period only on the amount received in that draw? For example if a Partner contributed 401(k) deferrals of $10,000 during the year from $50,000 in one draw the Safe Harbor Match per Pay Period on that contribution would be $2,500, but if the Pay Period match is calculated on Compensation (NESE = $200,000) the Safe Harbor Match per Pay Period would be $8,000?

Any input is appreciated!

Our client acquired a company that had a DB plan. The client wants to "make up" some of the loss from the DB plan. Here is what they want to do:

Current plan is Safe Harbor where they are matching 100% up to 5%.

For the acquired group of employees, if the participant is over 50, they want to match an addtional 50% on the next 3%. Is this possible? Based on the current population, they would pass BRF on the design. With this additional match, they would be required to run and ACP test.

However, my gut is telling me this may not be a permissible design. Any thoughts?

I'm reviewing a 409A-subject plan under which the payment trigger is a fixed (calender) date.

The payments that will begin on the fixed date are in the form of monthly installments for a certain number of years.

I am confused by the interplay of § 1.409A-3(d) and § 1.409A-2(b)(2)(iii).

Under 1.409A-3(d), a payment is treated as made upon a fixed date if the payment is made upon such date, or if later, then by the 15th day of the third calendar month following the day specified under the Plan.

Under § 1.409A-2(b)(2)(iii), installment payments are treated as a single payment (unless a plan otherwise specifies). (This plan is silent on the topic, so the installments are a 'single payment.')

Does the fact that the installments are deemed to be a single payment satisfy the 'fixed date' payment timing requirements of § 1.409A-3(d)?

Or, since the installments don't end until a later year (five years later), does this design fail to satisfy the 'fixed payment' requirements?

Thoughts?

distribution amounts were calculated and submitted to investment house. find out a month later that

instead of cutting checks to the participants the investment house forfeited the money and its sitting in suspense. but it was at least processed within 2 1/2 months.

well, I guess its easy enough to fix by taking the amount out of suspense and distributing it properly, but does the 10% penalty tax apply?

I guess if I cut a check to the person within 2 1/2 months and the person doesn't cash it until a month later it's ok, but what about something like this?

gotta love some of these investment houses.

Any input is greatly appreciated. We know that rental income is passive income and, as it is, does not constitute self-employment income.

However, question is this. If a person has established a business to serve as property manager, consultant, etc. with proceeds from rental income being paid to the business for their work, could this then be considered actual income? This is, of course, with the understanding that the person is actually working in this business capacity.

If potentially considered income, then the individual could certainly use proceeds from such as contributions to a retirement plan (e.g., 401K)? Thanks

A client wants to establish a collectively bargained voluntary separation plan and I am concerned that it may be considered a pension plan under ERISA since Fort Halifax will not apply. The client is a college and wants to provide a one-time lump-sum payment to an employee who voluntarily terminates employment after 20 years of service and between the age of 55 and 62. If the employee is involuntarily terminated then no benefit is paid. I feel pretty good that the voluntary vs involuntary distinction is ok under Fort Halifax since there is not a "for cause" determination. However, I am concerned that the time period for which the payment is offered is problematic since it will be in a collective bargaining agreement that will last for 3 years. I could provide a window say of 30 days in each of the 3 years but I am not sure that helps enough. I would appreciate any ideas. Thanks. I am aware of the 409A and 457(f) issues.

Any ideas on how to provide a voluntary separation pay plan under Section 457(f)? I have a College for a client that wants to negotiate with its union to provide a one-time lump-sum payment to an employee that decides to voluntarily terminate employment with 20 years of service with the College and between the ages of 55 and 62. Putting aside the Fort Halifax ERISA issue, if the arrangment is not considered a bona fide severeance pay plan when the IRS issues its final guidance, how can the College offer such a benefit without causing taxation when an eligible employee reaches the age of 55 but decides not to terminate employment? Notice 2007-62 talks about potential exceptions for window programs and collectively bargained separation pay plans. Does anyone think this type of arrangement might fall within one of these potential exceptions? If not, do you think it is likely the final guidance will grandfather collective bargaining voluntary separation play plans? Thanks for your help. This is not my main field of expertise and need some guidance.

A self-employed individual (Schedule C) has both a SEP and a traditional IRA. The person can make full, deductible contributions to both arrangements, right? In other words, the SEP isn't considered to be coverage under an employer-sponsored plan, and the 20% SEP contribution won't "taint" a deductible $6,000 IRA contribution.

Please forgive me if my question is simple and obvious. After two solid months in the Tax Trenches, I'm not longer capable of rational thought.

Do Puerto Rico Plans have to be amended for the HEART Act and WRERA?