I have a doctor who is considered a statutory employee who wants to setup a plan for himself.  All of his income will be funneled into a Schedule C (there's no 1099 or W2).  Any thoughts on if he could setup a plan based on that income?

Thanks in advance everyone!

My employer notified me that they had mistakenly limited my total eligible contributions at $56,000 instead o f$62,000 (I am 60 and maxing out after-tax) for 2019 and did not withhold my contribution for two pay periods - 11/28 and 12/13.  The first was before the error was discovered, and the second was after the discovering the error and notifying me. Unfortunately for reason I am not aware of,  they did not update the payroll system for the second pay period resulting in the second missed contribution. I have one more contribution opportunity for the year (12/27).  My employer claims that they are only required to make a contribution of 25% of the missed contributions which were mistakenly not made. This amount, combined with a maximum deferral on my part on 12/27 will leave me short for 2019 by $1,049.  I am trying to find which section of this https://www.irs.gov/pub/irs-drop/rp-18-52.pdf applies to my case.  I see some cases that might apply and put them at 40% instead of 25%. Any pointers would be appreciated. 

Also, are these percentages specific amounts required and that cannot be exceeded, or are employers allowed to make up the missed deferrals beyond the prescribed percentages if they choose?

Thank you - Harry

I've been having trouble finding information about self-funded health benefits plan approval requests under the Service Contract Act. The regulation is only three short sentences, and doesn't give much to go by: 

Quote

29 CFR § 4.171(b)(2) A contractor may request approval by the Administrator of an unfunded self-insured plan in order to allow credit for payments under the plan to meet the fringe benefit requirements of the Act. In considering whether such a plan is bona fide, the Administrator will consider such factors as whether it could be reasonably anticipated to provide the prescribed benefits, whether it represents a legally enforceable commitment to provide such benefits, whether it is carried out under a financially responsible program, and whether the plan has been communicated to the employees in writing. The Administrator in his/her discretion may direct that assets be set aside and preserved in an escrow account or that other protections be afforded to meet the plan's future obligation.

I found a thread from 2004, but I am wondering if anyone is willing to share more recent experience and insight regarding self-funded plan approval requests. 

Thanks!

Is there any transition or grace period before family attribution between spouses applies?   Details:  Business owner A marries Business owner B in a community property state on 5/1/19.   Are the immediately a controlled group for 2019 or could I treat this like an acquisition and apply the transition period for coverage?  

I’m confused.  Plan is a safe harbor 401(k) using an automatic contribution arrangement to satisfy the 401(k) safe harbor requirements.  Plan sponsor failed to implement an employee’s affirmative election.  I’m reading EPCRS.  One part says that the plan sponsor has to make a QNEC.  

Another part says that sponsor does not have to make a QNEC if the failure was corrected within 9 ½ months after the end of the plan year.  Does this  “special safe harbor correction method” apply to traditional automatic contributions only?  Or does it apply to QACA arrangements.

Expected to be passed by Friday!

https://www.pionline.com/legislation/secure-act-attached-year-end-spending-bill

What are the hurdles to changing the vesting percentage computation basis?

A plan currently has 1,000 hours for YOS for vesting.  

Can it easily change from hours counting to equivalancy or even elapsed time?

Facts:

Bonuses being paid today.

Employer failed to withhold pretax deferrals from some (not all) participants' bonus paychecks being distributed today. The Plan affords participants to make a special election wrt bonus pay. If no election is made, zero is withheld.  Upon reviewing the "bonus payroll" process, the employer realized the error but the funds were already "in process" to the participant's banks and could not be reversed/corrected in time.
 

Questions:

Since the error was caught the same day, is the correction to issue a Notice to those affected along with a deferral election form, giving them the opportunity to withhold what would have been withheld from their respective bonus (or some other amount at their discretion) via the up-coming final regular paycheck of the year? I believe all will receive sufficient final paychecks to adequately cover this missed deferral. If not, does this change the correction?

Thank you

Plan has individual accounts with a large recordkeeper (401k and safe harbor) and a pooled, Trustee directed employer profit share investment.

TPA prepares 1099-R forms for the client for any distribution from the pooled Trustee directed PS accounts.

In majority of termination (or retirement) payouts the participant takes the 401k piece at the time of termination and the profit share piece is paid out after the end of the plan year following termination; both per the plan provisions.  However in rare cases the participant may be taking the PS portion first.  Question is - in these cases should the 1099-R form from the pooled accts NOT have the "total distribution" boxed checked?  Does it matter?

Perhaps am overthinking this but it seems to be that if the 401(k) portion remains in the Plan, even briefly, it is not a total distribution until those funds are paid.

Not a fan of these types of plans!

UPDATE:  For anyone else wondering - here are the form instructions:

"Box 2b. Total Distribution
Enter an “X” in this box only if the payment shown in box 1 is a total distribution. A total distribution is one or more distributions within 1 tax year in which the entire balance of the account is distributed. If periodic or installment payments are made, mark this box in the year the final payment is made."

So as long as they both occur in the same tax year I can mark the total box.

The Treasury department’s rule under Internal Revenue Code § 402(f) calls for an administrator to deliver a § 402(f) written explanation “no less than 30 days . . . before the date of [the] distribution.”

Internal Revenue Code § 6652(i) imposes a penalty of $100 on each failure to deliver a § 402(f) written explanation.

To speed up a plan termination’s final distribution, an administrator is considering deliberately incurring that penalty.  In the circumstances, that amount is much less than the business harm that would result from not completing the plan’s termination by December 30.

I’ve already analyzed ERISA title I consequences, including about the fiduciary’s potential obedience and prudence breaches.

Is it so that an administrator’s compliance with § 402(f) is not a § 401(a) condition for a plan’s tax-qualified treatment?

(The plan’s governing document does not state any provision or command based on § 402(f).) 

Am I missing something?

I am working with an employer that has a plan that covers eligible retired employees. If the coverage is considered creditable, would a retiree's enrollment in Medicare Part D result in the retiree's loss of coverage under the employer's medical plan? What if the coverage is non-creditable and the employee enrolls in Medicare Part D. Would this result in the retiree's loss of coverage under the employer's plan? Can you provide a citation to a US Code provision or a regulation citation that supports your position?

Thanks,

I am new to working for multiemployer pension funds. I see a number of these plans are money purchase plans and they have a concept of deemed termination of employment, in which no contributing employer makes a contribution for an employee (for say, 6 or 12 months), then the employee is deemed to have terminated his/her employment and is entitled to commence distribution of his/her account balance. In the context of a money purchase plan, the IRS treats them as a pension plan and they require that the employee have a severance from employment. Thus, as applied to those types of provisions, the plan risks disqualification because there is no determination of whether the participant must have an actual severance from employment. Is the IRS view on these deemed termination of employment provisions less restrictive in the collective bargaining context or should the deemed termination of employment provision in a money purchase plan be read as also requiring an actual severance from employment? Does anyone have any legal authority to cite either way for such a proposition?

Can an employer offer an "opt out" incentive for employees who decline coverage ( only if enrolled the previous year) and not offer any incentive to employees who have never participated in the plan? The former saves huge money and only makes sense, but is not offered to me.

Our new client is an S corp. with put option.  We discussed the NUA treatment with the client whether or not this has been applied to past distributions and received very vague and incomplete information.  This has made us skeptical if this was correctly applied.  Seems to me that this treatment would have been applied across the board to all particpants to which it was applicable since plan inception (or post Rev proc 2003-23) to avoid nondiscrimination.  Any thoughts? 

My apologies if this fact set is covered elsewhere, and appreciate any thoughts.

One owner corporation sponsors calendar year 401(k) non-safe harbor plan.  No employees until 2018, one employee becomes eligible for plan in 2019, owner neglects to provide the opportunity to participate.

Owner has not contributed to the plan yet in 2019.  Obviously the plan is top heavy.

Assume first that the owner will not participate in 2019.  How do I determine the missed deferral opportunity if there were no NHCE deferrals in the past?

Can I use 3% (similar to the rate used in the first year of a plan using prior year testing)?  If so, is the QNEC 50% of the 3%? 

Let's assume next that the owner does want to participate, and let's assume the owner wants to defer 10% of their compensation.  Is the QNEC now 4% (that is, 50% of the 8% needed to pass ADP)?

If any of that is actually correct, does all of the missed deferral correction amount count towards top heavy, or must the top heavy minimum be contributed in addition to the correction amount?

Thanks very much.

Plan eligibility for 401k and match is at hire.

Plan will match 100% of the first 6% of 401k.

Plan wants to set up traditional auto enrollment at 3%.

No safe harbors in this plan.

Does that sound funny?

Can someone comment on the attached shortfall summary. It seems that my outstanding balance in 2018 is less than the sum of the annual charges. Don't see where my calc went wrong!

2018-SHORTFALLBASE Sheet1.pdf

If you have late deposits in a MEP from several participating employers, who is responsible for the excise tax?  The plan sponsor or the individual employers?  Anyone know where to find any guidance on this?

Can a non-electing church plan require that only full-time employees are eligible for all contributions, even if that means that some employees working more than 1,000 hours are EXCLUDED?  It seems permissible, but I just want to be sure...Also, I am seeing some old coverage rules that may indicate that they need to cover 70% of their total # of employees?  Is that applicable?

Thanks!

We sold our ESOP company in early 2018. The Plan has been terminated with the IRS. We have an independent Trustee who chose to distribute 80% of the sales proceeds to all participants in 2018, but withheld 20% for unanticipated expenses (like a mini escrow). The question is, does the Trust have to process RMDs for 2019 on a terminated plan? Any experience or advice on this topic would be greatly appreciated.