IRS has granted extensions to file returns in disaster affected areas until October 31 in many areas on the East Coast (see IR-2011-87). Accountants are telling me the relief does not extent the date by which tax payments are due. They are asking whether the contribution deadline under IRC 404(a)(6)** is extended or not.

I believe the payment deadline is referenced to the Due Date of the Return - Including Extensions. I don't think the due date for tax deposits should have any impact?

What are you telling your clients about the 404(a)(6) deadline for 2010 income tax returns that have been extended to Oct 31, 2011?

thx

** Section 404(a)(6) provides in relevant part that, for purposes of section

404(a)(3), "a taxpayer shall be deemed to have made a payment on the last day of

the preceding taxable year if the payment is on account of such taxable year and

is made not later than the time prescribed by law for filing the return for such

taxable year (including extensions thereof)."

For 2010 -

MRC is 100K

Max deductible is $200K.

Can a Sole-prop on extension contribute the 100K by 9/15 to meet MRC and contribute an additional 100K between 9/15 and 10/15 for deduction purposes?

If so would the additional 100K be shown on the 2011 SB for minimum funding?

We have a new client that has a tax exempt 457(b) plan that has not been updated for about 10 years (before the 2003 regulations).

How strict is the IRS with regard to document compliance in this area? Would a retroactive amendment be in order here? Does anyone have any experience with 457(b) document issues and the IRS? I'm trying to get a sense of how much leeway we have with the document.

Here is an ancient question: were government plans supposed to amend for CRA '00? The change seems miniscule but I have a reviewer asking about proof of timely compliance for a takeover plan. Sigh. I looked here earlier and there were a couple of old posts from someone asking this question but I don't think I saw any replies...Thanks for any input.

Plan terminated and final distribution of plan assets were 3/31/11. Can a 5558 be filed to extend 5500 due date from 10/31/11 to 1/15/12??? For some reason i'm thinking a plan that has made final distributions could not extend 5500. Thanks.

401k safe harbor plan has not been funded for 2010 due to death of owner. Who knows what to do in this case? Does the spouse take over as trustee and then become responsible for the funding? Since it is very likely the plan will not be funded by the 9/15/11 deadline, does the plan automatically become a regular 401k and subject to testing? So many issues to deal with, don't know where to begin. Thank you.

May a plan charge interest on an overpayment? I thought it could, but I am having trouble finding any case law that is on point. I would appreciate any help out there!

Okay these always have twists to them

Corbel Prototype

1 year/ age 21/ entry 1/1 and 7/1

Employee "Joe" DOH is 5/11/09

Terminated 12/31/09

Rehire 5/23/10

Initial computation period

5/11/09-5/11/2010 525 hours

Switch to Calendar Year

1/1/10-12/31/2010 less than 1000, but over 500

From Date of Rehire

5/23/10-5/23/11 over 1000 hours

So if you only use the anniversary date of computation period from Original Date of hire - he might come in on 1/1/12.

If you start over as of his rehire date he comes in 7/1/11

So can including past service keep an employee from becoming a participant longer than if someone that was just hired.

Bob, Joes friend, was hired 5/23/10 , not rehired, on that date and will come in on 7/1/11.

So will Joe and Bob have different entry dates because Joe was a Part time Student Employee in the past

I have read past posts that state that you can only use the Anniverary Comutation Period on the Original Date of Hire, but it doesn't seem fair to me that his past service should hurt him.

Of course this business is not logical.

Thanks for your help

Pat

Can you use the owner's SS# as the employer's EIN if they do not have an EIN? It’s a small solo 401k plan. The 1099 is for the owner and is being issued by the owner. There is no withholding or anything.

the employer told employees all year last year that the plan had a discretionary match. the plan has 1000 hours and last day rule requirement to accrue the match. time has come to fund the match for last year and the company has no money. are they required to fund the match or can they just say we can't do the match. it is discretionary anyway.

Does anyone have any practical experience in understanding the definition of Predecessor Employer in Regs. Section 1.415(f)-1©(2). I am particularly concerned/puzzled by the phrase “a continuation of all or a portion of the trade or business of the former entity”.

Two doctors operate a partnership which maintains a defined benefit plan. The doctors split and Doctor A assumes the sponsorship of the DB Plan. The employees who leave with Doctor B are paid their benefits under the DB Plan, except for Doctor B. Doctor B is apparently not paid because the plan is under-funded. His benefit is still held in the old DB Plan currently sponsored by Doctor A. Doctor B now wants to establish a cash balance plan for his business. Is the partnership considered a Predecessor Employer and, as a result, must Doctor B’s benefit under the old DB Plan be aggregated with his benefit under the cash balance plan in determining his Section 415 limitations?

Any thoughts with citations or references would be greatly appreciated. Thanks.

Solo plan had an eligible employee for 2010 and 2011 and that's it. Assets currently <250K.

1) I'm marking the s-f as a first return reprot. Anyone think I'll get a letter from the DOL asking where last year's 5500's are? Anythin I can do to prevent it?

2) When I lose the employee, I'll be over $250K, so still need to file the EZ. I think that's a good thing because when the DOL writes me looking for the 2011 filing, I can produce the EZ (I'm assuming the DOL will have no record of that).

Anyone have any other tips? I'm srt of resigned to the fact that I will be getting letters from the DOL/IRS on this...

I'm trying to figure out whether it's better for an employee to get a 403b excess deferral refund from (a) a Roth or (b) a traditional account where (1) the refund occurs after 4/15 of the year following the year the excess contribution was made, (2) the total contribution was split between both kinds of account, and (3) the excess contribution occurred with a single employer. If the refund is from the traditional account, the employee adds that amount to reportable income for the year in which the contribution was made, and must also report the amount as income in the year the distribution occurs. If the refund is from the Roth, the reportable income in the year in which the contribution was made already includes the excess contribution, and the employee must report the amount as income again in the year the distribution occurs. In both cases, the amount is taxed twice, but where the refund is from the traditional account, the total reportable income seems to be higher. Is that right? Is there a difference in what penalties might apply, or any other difference?

John Doe comp is $120,000. John works 3 months in 2010, and then has 9 month military leave.

During 3 months in 2010, earns $30,000 in comp, and defers $16,500.

Reemployed Jan 1, 2011.

Company match is 1:1 up to 10% of pay.

He already received $3,000 in match (10% of his $30,000 pay)

Is he due an additional $9,000 in match upon reemployment?

Or is he out of luck, because the match is contingent on him contributing, and he can no longer contribute?

What if it was the same scenario, but instead of deferrals of $16,500, he did $16,000. He then decides to "make-up" $500 for 2010. What company match is due then?

Is it just 1:1, so $500?

Should we look at the full year, and see that he would have been due $12,000 based on his comp, therefore he is now owed $9,000 in match?

Is it nothing, because these $500 are deferrals above the 10% income threshold that is used for all other employees to cap company contributions?

Generally speaking, when we calculate company match, we fund no more than 10% of pay per period, but we evaluate based on the full year, and we do a true-up contribution to make sure that for each year, employees receive the match based on their full year's comp, so if people fund quickly or late in the year, they receive the same match as people funding 10% evenly throughout.

Thanks for your thoughts.

Does anyone have recent information on the percentage of Maximum Payment Amount that IRS is using to determine the sanction amount under the Audit CAP? The plan document was not current upon audit but we have since obtained all amendments, etc. This is the only "problem" discovered by the agent. This plan has fewer than 10 participants, one HCE.

ESOP passes the 1/3 test. However, by the time forfeitures are reallocated to participant accounts on the last day of the plan year, the plan is no longer leveraged because the loan has been repaid by returning the shares to the employer (the plan is terminating). Can the forfeiture allocations be excluded from annual additions under section 415 (pursuant to Reg. 1.415©-1(f))? On one hand, the forfeitures (when they occurred) were forfeitures of employer securities that were acquired with the proceeds of the loan. On the other hand, by the time the forfeitures were reallocated to participants, the reallocated amounts were cash.

I have a plan that changed its vesting schedule in 2009 from a 6 year to a 4 year.

If a participant had left, say in 2006, and requested a distribution in 2010 or 2011, do we use the vesting percent that they had at the time of termination or does the new vesting schedule apply? The document does not give any clarification.

Can a retiree medical VEBA (assuming that such does not conflict with the collective bargaining agreement establishing the VEBA) implement a provision requiring retirees to enroll in other employer-provided medical coverage if they re-enter employment? This would be analogous to a spousal carve-out, but for the retiree (as compared to the retiree’s spouse). The intent would be to have the current employer’s health plan stand primary and the VEBA secondary for purpose of coverage.

In a broader sense, the question is: Can a retiree medical plan require a retiree who returns to work to enroll in employer-provided coverage?

We have a larger employer who has well over 500 employees and who sponsors a 403(b) Plan. However, about 80% of those employees have less than 1000 hours. Since 1000 hours is roughly the difference between being over/under 20 hours/week, is it safe to say that the employer could simply exclude all of these individuals from the plan, even the employee 403(b) contribution?

I assume that when these individuals are hired, a determination has to be made (and applied consistently) as to whether the individual will be over/under 20 hours/week in order to determine if they are in the plan. Is this how it is handled?

Thanks

ok, so doing a takeover case. went out to the DOL website to pull last year's 5500 (there are 2 plans)

but wait, there are 3 out there from 2009, one with a completely different name.

looked that name up on FreeErisa, and its there for 2008 and 2009, but also there in 2004 under a different EIN (beginning 54- instead of 59-)

ooops. someone has filed under the wrong number.

oh, look at the 2009 filing. I see it wasn't signed until 1/21/2011 so that was late.

oh, and it has late deferrals listed.

the things you stumble across.