I have read posts and tried to understand everyone's points.  I thought I read somewhere recently that 1099 employees were going to have to be counted (or was it seasonal employees?).  Anyway, I am working on a potential new client who has a business selling medical devices or pharmaceuticals.  Each employee is paid commissions and bonuses on a 1099 but they  also receive a draw which is paid on a W2.  Add to this that the company is reimbursed the draw reported on the W2 from commissions and bonuses.  

Do these employees count?  Do they count only on their W2 income or ALL of their income?

Thankyou

This is one post I was reading:  Excluding 1099 Employees

We administer a small 401(k) plan with about 10 participants.

The 100% owner of the company sponsoring the 401(k) plan died.

In this particular plan, they had self directed accounts for salary deferrals and a pooled account for all employer contribution and rollover sources. The 100% owner never contributed salary deferrals and his account balance 

The 100% owner did roll over a large portion of his overall benefits from a defined benefit plan that terminated about 5 years ago. About 60% of the pooled account is comprised of private investments (trust deeds, partnerships etc.). I am a little worried about the timing requirements of death benefits being paid to his spouse as his primary beneficiary. We think it may take some time to unwind some of these private investments.

The plan document does not seem to address when death benefits need to commence. The 100% owner just turned age 72 this year.

In general, we have always heard of death benefits being paid by the end of the year of the participant's death.

Is there specific timing on when benefits must be paid?

Thanks.

Both I and another co-worker have plans that are a control group where 1 spouse's company sponsors the plan and the other spouse's company is an adopting er.  With SECURE 2.0, the control group link (minor children) will go away and thus the plan will become a multiple employer plan.  It may, however, be better for the spouse that is an adopting/participating employer to stop participating in the current plan and start up their own retirement plan for 2024 and beyond.  

Would this just require an amendment to "unparticipate" in the plan they are currently in?

If a client has 49 employees within a 75 mile radius of their HQ and 11 employees beyond 75 does, does FMLA still apply? 

An ineligible employee was allowed to make several deferrals. (She works less than 20 hrs a week)

 Usually, the correction is to either make an amendment to allow the person early entry or to refund the money.  This is a 403(b) plan, so I believe the former is not an option due to the universal eligibility rules.  (I thought if you let one of the <20 hrs people in you had to let them all in...)

 But, before this was caught, the account was reduced to zero via monthly fees.

 Are we done?  Or does the account have to be sort of rebuilt and distributed so the taxable income is realized by the employee?

I am tasked by a client with getting the ACA 1095 (and 1094) filings done (way late) for years 2017-2020.  I am looking software suggestions. Thanks in advance.

We have a client that is an LLC filing as a partnership but the K-1s are completed differently than I have seen before.  There is nothing reported in Box 14 even though the net income for the company for the year was over $1 million. Both partners received guaranteed income for the year of $120,000.  One partner is a limited partner and the other a general partner. We asked the CPA why there was nothing in Box 14 and he indicated that per the IRS rules, if a reasonable guaranteed payment for services is paid to each member, the earnings of the LLC reported in Box 1 of the K-1 would not be subject to SE tax.  They believe that the $120,000 is a reasonable amount and each member did pay SE taxes on that amount. 

Since guaranteed payments are not normally considered in the self-employment compensation calculation and there is nothing in Box 4, it seems that their plan compensation would be zero. They did defer and wanted to put in a profit sharing contribution for themselves but I think the deferrals will have to be returned.  Does this sound correct?  Has anyone had this situation?

Gosh I'm glad I don't do ESOP's. But we do get some questions now and then from referral sources where we try to provide some general guidance on what a client might want to discuss with their ESOP legal counsel or TPA, etc.

Along those lines - now that pre-approved ESOP documents are available, I have a question about the timing of adopting one. An employer has an ESOP, which did receive a determination letter several years ago. The CPA wants to know if a pre-approved ESOP document has an IRS approval date in 2020, is it a "late" adoption if adopted currently? In other words, does the normal 2-year window apply? I'm thinking that as long as timely interim amendments were adopted, they should be ok - relying on the prior determination letter until they adopt the new pre-approved plan at whatever date.

Pardon my ignorance on this issue, as I've frankly paid no attention to such ESOP questions - they don't apply to our business except tangentially for questions such as this that sometimes come across my desk.

Thanks in advance.

Start-up 401(k) plan for small employer (no more than 5 regular employees, not including interns) intends to have eligibility criteria for all contribution sources attainment of age 18 and completion of 6 months of service, elapsed time, with quarterly entry dates.  The sponsor wants to exclude interns, but there is a concern that the exclusion may result in a coverage failure, given the number of interns and their potential duration of service.

To avoid a coverage failure, can the plan provide for an exclusion of interns subject to a fail-safe that allows an intern to enter the plan effective the first day of the quarter coincident with or next following the intern's attainment of age 21 and completion of 12 months and 1,000 hours of service? 

A few questions about FSA during M&A:

1. Scenario: The FSA plan continues under the seller's plan - after the two parties agree that the seller will continue its medical FSA for the transferred employees, I am reading the buyer must have an existing medical FSA plan OR be prepared to adopt a new one. 

    QUESTION:   How soon does the buyer have to adopt a new FSA plan?  Say for example, the parties agree the buyer will continue the seller's plan until the end of the plan year.  Would the buyer have to adopt the new one after the end of the seller's plan year or is it expected that the buyer will have to adopt the new FSA plan ASAP after the close of sale?

   QUESTION:  If the buyer assumes the seller's medical FSA how does that usually work with the FSA vendor and the contract?  Does the buyer have their own contract with the vendor?  What is the usual situation with this? 

So I have an owner of an LLC who is the only employee.  She owns her company 100% and her company is a participating ER of the plan that her husband's company (another owner only LLC) that sponsor's the plan.  It is a control group for now anyway, thanks to Secure 2.0.

She has been talking to someone other than us (her TPA) and her broker and thinks she can open a 2nd 401k plan.  Since her company is an adopter of the plan she is currently in, wouldn't she be prohibited from creating a 2nd 401k plan?

Since there will no longer be a control group next year because of the family attribution changes, she could spin off her own plan, right?  I have done a small handfull of mergers, but this is the opposite and am not sure how this would be handled...

We are a midsize TPA firm established in 1977 looking for an acquisition or merger.  Please respond to steve@apspension.com.

Now that new pre-approved 403(b) documents have been submitted to the IRS for new Cycle (or maybe Sickle?) does anyone have contacts at the IRS as to how the discretionary matches might work? With the Cycle 3 401(k), they allowed the "flexible discretionary match" provision due to the late decision that previously "normal" flexibility shouldn't be allowed, but word on the street was that they would NOT permit this approach on the 403(b) plans.

I don't know about the rest of you, but some of our non-profits have some of the most ridiculously complicated flexible match scenarios, which likely won't be allowed. Anyone have IRS contacts/feedback, at this early stage, as to what parameters might be imposed on match formula provisions? Never too early to start preparing them that they might have to think about other possibilities...

Thanks.

Group

I'm looking for a comprehensive checklist to review an ESOP plan for compliance. Anyone have a checklist they're willing to share and/or a resource that does a pretty good job. Anyone using artificial intelligence/chatgpt /othet apps to review ESOP plans and compliance? 

I have an old checklist and just want to see if there's something I'm missing or should change. 

Thoughts and comments and resources are much appreciated. 

Hi

Did a proposal for 2022 for a one lifer. They said to go ahead, asked for w-2 and when I got it, there were 2 listed.

CPA said the other was part-timer and terminated in 2022. Insisted on DOH and DOT.

Surprise surprise, DOH early 2021 with DOT late 2022. I asked for hours and of course, full-time employee.

Can set up the plan with 3 year cliff and/or 2/20 with no prior service before 1/1/2022 aka effective date of the plan. Not sure how the partial termination would play here as employee is not replaced. What do you think on this?

The question here: Is it ok to set up the plan now with 2 year wait (100% vesting is not an issue as it is only the owner)?

This is unchartered territory for me and not sure about discrimination issues.

Thanks

This one is new to me, so I wanted to check.  We have a potential new client, who plans to employee their 10-year old son (I'm not really sure of the specifics, to be honest).  So the question is:

1) Can someone legitimately have a 10-year old on their payroll?
2) If they are allowed to be on payroll, could they then allow them to participate in the 401(k) Plan?

The whole thing seems a little odd to me, but they are asking questions so I wanted to try and get the correct answers.

Thanks!

I'm looking at a 5500 Schedule I that was prepared for an ESOP. Diversification elections were made, whereby assets were transferred to the employer's 401(k) plan. The Schedule I, Line 5b, does NOT show these transfers. It seems to me, reading the instructions (excerpt below) that this should have been reported on Line 5b? They were included on the distribution line on the 5500 itself.

I don't know how critical this is, in real life terms. If it was reported incorrectly, at least it was "reported" - if the DOL audited the report, maybe just an "oops - reported on wrong line" and do amended 5500 form(s)? I have no idea how far back this goes... 

Line 5b. Enter information concerning assets and/or liabilities transferred from this plan to another plan(s) (including spinoffs) during the plan year. A transfer of assets or liabilities occurs when there is a reduction of assets or liabilities with respect to one plan and the receipt of these assets or the assumption of these liabilities by another plan. Enter the name, plan sponsor EIN, and PN for the transferee plan(s) involved on lines 5(b)1, (2), and (3). Do not use a social security number in lieu of an EIN or include an attachment that contains visible social security numbers. The Schedule I and its attachments are open to public inspection, and the contents are public information and are subject to publication on the Internet. Because of privacy concerns, the inclusion of a social security number or any portion thereof on this Schedule I or the inclusion of a visible social security number or any portion thereof on an attachment may result in the rejection of the filing. Note. A distribution of all or part of an individual participant’s account balance that is reportable on IRS Form 1099-R should not be included on line 5b. Do not submit IRS Form 1099-R with the Form 5500.

I am looking for some guidance on the following scenario please.

1. In January 2023 an HSA account holder intended to contribute x amount toward the 2022 tax year. Howeever, in error, he contributed the funds toward the 2023 tax year. In February 2023 all funds are transferred to a new HSA trustee in a trustee-to-trustee transfer. In March the account holder realizes the error and requests to have the January contribution recoded as a 2022 contribution. What obligation does the new trustee have to make this correction? How will this correction affect the trustee's 5498-SA filing?

Is anyone aware of a list of approved VCP corrections? A co-worker recalled seeing a list (over ten years ago...) complied by someone which laid out a bunch of approved correction methods. 

I have not been able to find such a list, and I'm not sure how someone would even have access to this info to create such a thing. 

Thanks! 

How is a buyer to treat cobra continuation coverage under the following circumstance:  Seller has former employees who have elected mini-COBRA coverage pre acquisition.  Seller will terminate the benefit plans so Buyer will have the obligation to provide COBRA to all M&A qualified beneficiaries which would include those individuals currently receiving mini-COBRA.  Does Buyer continue to provide coverage for the mini-COBRA period (12 months) even if Buyer is a large employer and not eligible for mini-COBRA or does the COBRA continuation period increase for those already receiving mini-COBRA because Buyer is subject to the federal COBRA regulations?

If you're aware of any  guidance, PLRs, cases, please share.