Deleted because client objected to information being posted.

Thank you anyway.

S.

Generally when calculating eligible income for Self Employed, 1/2 of the social security tax and 1/2 of the medicare tax are subtracted - which would normally be 6.2% (up to TWB) and 1.45%.

2011 had a 2.0% tax cut for EE's, so the Self Employed ended up paying 6.2+4.2=10.4%. Would we then take half of that, or 5.2% for calculating eligible earnings?

We have a client with approx 75 Participants. The owners have acquired another company and they want to write a new plan for that company (approx 75 participants in the new company). Do we need to aggregate the 2 plans in determining whether or not they require a Plan Audit?

Thanks

I am wondering how the involuntary cash out limits are calculated. Is the lump sum value reduced to a present value at the participant's date of termination or when he would reach NRA? The reason I am asking is b/c I want to know if it is even possible for a $179.50/month benefit payable at age 65 could possibly be under the $3,500/$5,000 amount. The participant terminated from the employer in 1987 and he reached 65 in 2010.

Thanks!

Dad owns 100% of a Barber Shop.

Dad and Son each own 50% (exactly) of a rope-making business (not related to haircuts). The son is over age 21.

Controlled Group? I think not, as long as the son owns 50% (or more). Assumes no rights to buy stock or any other such oddities.

Adult Child Attribution: If an individual has a child (or a step-child if the individual had adopted such child) that is age 21 or older, the child’s ownership interest in a business is attributed to the parent, but only if the parent owns more than 50% of the same business. To determine the 'more than 50%' ownership, direct ownership plus any other ownership attribution must be included other than the “adult child attribution”. Likewise, if the child has a more than 50% ownership interest in a business, then any ownership held by either of the child’s parents in that same business is attributed to the child.

Confirm?

Parent Co buys the assets of Small Co. Small Co has a 401k plan which it will terminate. Paren Co allows loans anjd would like to let the two or three people with loans to roll their loans into the new plan. Do I need a plan amendment to allow this? What sort of paperwoirk is required from the participant to make such an election?

I’m working on populating the census and need to know if the “gross income” should include domestic partner health insurance premium benefits paid or not. It’s included in taxable income for employees receiving domestic partner benefits but didn’t know whether we included - the plan document is not clear? Thanks ahead of time for any guidance!!

Client has a safe harbor non elective contribution and an integrated profit share contribution with a last day provision. There is 1 HCE and 2 NHCE's. All 3 received 3% non elective. One NHCE terminated and does not get a profit share contribution. She worked over 500 hours. When calculating the ratio test, are both NHCE's counted as benefiting since they received the safe harbor contribution? Is there further testing that needs to be done since the two NHCE's received different contribution rates?

I just had a cafeteria plan come into the office. It was adopted in 2004 and has a Medical Reimbursement Plan. The MRP permits reimbursements for over the counter medications without a prescription. It is past the June 30, 2011 retroactive amendment date. Is there a VCP program for Cafeteria Plans?

Thanks

Is surrogacy asssitance, provided by the employer, nontaxable?

We have a company, USA, that is based here. There is a parent company in Germany that has based a German national here for two years. He is really an employee of the German co., but is paid by the US co through what they are calling a shadow payroll - basically, he is added to the USA payroll and the USA co invoices the German co for the wages.

Since he's showing up on the USA payroll, the Q arises as to whether he is eligible for the USA plan. If I had to answer, I'd say "no" because they are just using the USA payroll as a convenience. (I think I've seen related companies that are not necessarily controlled groups using one company as a common paymaster and just because someone shows up on a payroll report doesn't make them an employee.)

Any thoughts?

P.S. He's not a nonresident alien who would be excluded under the plan terms; has too many days of residence.

Am I correct that there is no way to do a nonelective transfer between a 401k and a 403b? Trying to swoithc a 401k client over to a 403b and wanted to know if it was possible to do nonelective transfers from one plan to the other.

NOTE: We would not be terminating the 401(k) plan - the union employees would be remaining in the 401k Plan.

I'm at a loss here. The trustee of a self-directed IRA has been directed to sell a limited partnership interest held by the IRA to a third-party in exchange for cash. No big deal. HOWEVER, for whatever reason, the IRA owner is directing the trustee to make the effective date of the sale retroactive to LAST year (January 1, 2011). From what I can tell, this probably presents tax fraud issues for the partnership/partners BUT from the trustee's perspective as a directed trustee, should the trustee nonetheless agree to complete the transaction retroactively? It seems like it would be complicit in the fraud. What I'm not sure about is how this would impact the IRA itself (would it somehow be disqualified or would the cash received from the sale somehow be treated as a distribution/contribution)? The IRA trustee hasn't done any year-end reporting yet, so I think that's probably not at issue. I work only with qualified plans/health plans/exec comp and know NOTHING about IRAs (other than stuff related to rollovers and SEPs/SIMPLEs generally), so I just need some help with issue-spotting or a nudge in the right direction. This seems like more of a partnership tax (or even personal income tax) issue to me, which means I'm entirely out of my depth. I've ruled out a prohibited transaction, so no comments in that regard please. Any thoughts?

My boyfriend is currently going through a divorce. His ex has made it clear that she will want half of his 401K. Since we live in PA she will get what's fair and only 1/2 (if she gets that) of what was accrued through the marriage. It is HIS 401K, she did not contribute anything and opted to not have one even though she was a RN making great money during their marriage. What we want to know is, if his plan through his employer states that in the event of a divorce settlement, what she is awarded is to be moved and cannot be touched until he withdrawals - do the courts have to abide by that plan? Is that what is put into the QDRO or can she fight and say she wants a lump sum of cash?

Does the Notice/Statement that is required to be sent to participants listed on Form 8955-SSA have to be sent to individuals listed with Code D, as well as Code A? It seems that the D's dont need the notice because they already received notice that they had a deferred vested benefit. The IRS has not addressed this directly. The conservative approach is to send the Statement to both A's and D's, but would omitting the D's be reasonable in view of the lack of guidance?

I just picked a client that used a big payroll company. When they were with the payroll company they used the per payroll method for making safe harbor matching contributions.

The problem is that the owners made their max 401k contribution within the first 3 payroll periods. Thus they only recvd the safe harbor match for those 3 payroll periods.

The question is whether to do a true-up match?

Section 3.1.2 of the Plan document prepared by this payroll company says, “matching contributions will only be made if Elective deferrals are made.”

Thus it appears that no true-up is required.

However, Section 1.1.17 states that, “Compensation shall mean wages defined in Code 3401.” However the last sentence of Section 1.1.17 also states that, “If a contribution under the plan is made on a periodic basis, compensation used to calculate the contribution shall be the compensation for the period in question.”

I believe that the plan does not explicitly define compensation as on per payroll basis to match the terms of the contribution per payroll method. Thus one could argue that a true-up should be made, based on the reference to 3401.

Any thoughts???

We all know key employees are subject to a 6 month waiting period before any benefits can be made, but what happens to a key employee's bonus deferral election if he terminates after the bonus is earned but before it is paid?

Example, a key employee elects to defer 50% of his 2011 bonus (payable in 2012). He works for 11 months of 2011 before he terminates in November.

The company decides that they will pay him $20,000 in 2011 Bonus.

Does his elected portion have to be deferred into the plan, and thus, subject to the remainder of his 6 month waiting period?

Any help/thoughts would be great.

Thanks.

Running the Top Heavy test in a 401k plan. A participant rolled money into the plan during the year. This always confuses me....

1. If the rollover comes from an unrelated employer plan, I know that something shouldn't be included in my test. Is it just the rollover contribution? or is it the entire rollover balance on the determination date? For example, the rollover contribution was $1000 on July 1st, on December 31st, the rollover balance was $1100. Do I exclude $1000 or $1100?

2. Is the rollover excluded forever, or just in the year of the rollover contribution? I think just in the year of the rollover contribution, but am not sure.

3. I think the whole point of this is so that the rollover is not double counted. Does this apply to an IRA rollover into the qualified plan?

Thanks!

IRS guidance on how to price coverage provided to domestic partners, for imputed income purposes, has been doled out piecemeal over the years via private letter rulings.

Among other options the PLRs provide that amount includible in the employee’s gross income may be calculated as equal to the difference between the amount the employer would contribute for the employee alone, and the amount the employer would contribute for coverage of an employee and a spouse or family, as applicable (i.e., excluding employee contributions). This is a calculation method that will be quite a bit lower than using COBRA premiums as a standard.

More recently there has been guidance in Notice 2011-28 and now 2012-9 on how to value coverage for purposes of reporting the value of group health coverage only, not taxing it, on Form W-2. It is not clear to me whether or not the W-2 guidance for reporting only supplants the prior PLR guidance on imputed income calculations of what is actually taxed. In general the PLR guidance on what is taxed, is narrower than the W-2 guidance on what is reported “for information purposes only.” For instance the PLR guidance allows exclusion of the employee’s portion of contributions whereas the new guidance on W-2 reporting specifically provides that employer and employee contributions towards coverage must be included in the value for reporting purposes.

Technically of course the PLRs are only citable authorities for the taxpayers who obtained them but I am wondering the degree to which payroll departments that have been relying on PLR-sanctioned methods of calculating imputed income, are switching over to one of the valuation methods cited in Notices 2011-28 and 2012-09.

A participant's distribution was processed by closing her FBO brokerage account and having checks issued to the participant (70.5%) and one to the company (20% Fed w/h, 9.5% State w/h).

Company wrote two checks and remitted with vouchers to US Treasury and FTB under the Participant's SS#.

Don't I have to prepare a 1099-R? If I do, would I put SS#s in where the Plan's EIN would normally go (Fed & State Payers ID #)? Otherwise, something isn't going to match up somewhere. I have to report a gross distribution and withholding somehow.