We know that a safe harbor 401(k) that "consists of solely a cash or deferred arrangement and matching contributions that satisfy the safe harbors of 401(k)(12)/(13) and 401(m)(11)/(12)" gets a pass on the top heavy requirement.

I'm sure I'm overthinking but if I have a Plan with employee deferrals and SH match basic formula, then an additional 100% vested ER match of 25% up to 4%, I still get the TH free ride, right?

A new health and welfare plan was established in 2016 and had less than 100 participants in 2016 and 2017 so no Form 5500 was filed. For the 2018 plan year, we were incorrectly told by the client that the number of participants at the beginning of the year was 145 so we filed an extension before July 31 indicating this is the first extension for the plan. Upon additional review, the client confirmed there were only 20 participants at the beginning of 2018 , therefore a 5500 report is not required.

Do we need to do anything to notify the IRS to disregard the extension?  Will we get any inquiry from the DOL about a potential filing? Now that we filed an extension, do they expect to receive a 5500?

Thanks.

Here is an interesting question.  Participant has $10,000 of Fund A in his 401(k) account and $5,000 of a participant loan in his 401(k) account.  He also has $7,000 of Fund A in his Match account. 

Can I have the participant sign an investment election to rebalance his portfolio and shift $5,000 of Fund A from his Match Account to his 401(k) account, and then transfer $5,000 of his loan from his 401(k) account to his match account.

His 401k account would be reduced by the $5,000 loan leaving, but increased by $5,000 of Fund A being transferred in. As a result, the account has the same balance in the end.  The same thing happens in reverse order on the match side.

Is there anything in a reg or whatever that indicates the source of a loan can never be altered?  There is much in the rules that is quite clear that loans are INVESTMENTS like any other.  A consequence of that definition is that this should be doable.

One of my clients is going through an IRS audit and is getting frustrated. We have been supplying her with everything but she now wants us to take over speaking with the auditor. Years ago, I would complete the Form 2848 as an unenrolled return preparer and using my CAF number. Looking at the 2848 now, it appears that I can no longer do this? Do I need to apply for a PTIN?

Am I no longer allowed to speak with the auditor at the client's request?

Any advice would be appreciated.

Taking over a 401(k) set up by one of the payroll companies in 2017.  It is a law firm organized as a partnership of professional corporations.   The three partners did make 401(k) deferrals both years, however the processing payroll company did not include the individual PCs as adopting sponsors of the plan.

Think IRS would approve a correction for them to adopt the plan now retroactive to 2017?   There are about 50 non-partner employees of the partnership who are in the plan (about 2/3 of them are NHCEs).  

Thanks. 

Is there an additional requirement that if an Owner who is LESS than a 5% owner, over age 70 1/2 and is still employed MUST take RMDs because they are in a "position of control" with the Plan Sponsor/Employer?  The TPA is stating this to our client, but I haven't been able to easily find anything requirement this by the IRS.  Perhaps it's a Plan Document requirement?  Trying to find an answer for the Owner/Employee.  They actually serve as the "Chairman of the Board".  Not really sure how much "control" they really have.  

Your help is greatly appreciated!

We have a client that has an existing safe harbor 401(k) plan that does the enhanced match.  There may be a new participating employer joining due to control group issue that does not have a current plan but cannot afford the enhanced match.  May new employer do the basic match instead and have special language to that affect on their participating employer agreement?  Both companies have HCEs.  

Self insured plan wants to cap payments made for air ambulances to some arbitrary number, $20,000 for example. Does it matter that this is for emergency care, and is this a essential health benefit under the ACA? Any source you can point do would be appreciated. Thank you!

So, suppose you have CG, consisting of Corps A, B, C, and D. A & B sponsor plan #1, and they run on a calendar plan and fiscal year. C & D sponsor Plan #2, and they run on a 10/1 to 9/30 plan and fiscal year.

The numbers are such that either plan, no matter how you look at it, passes 410(b) and 401(a)(4) EASILY, as very few HCE's participate.

However, as an academic exercise for future reference, suppose you are testing Plan #1 (calendar year) and you wish to determine the HCE's for 2019. When doing the 5% owner test, are you looking at 5% owners only in 2018 and 2019, or, would an owner who was a HCE in plan #2 in the 2017-18 plan year by virtue of ownership in December of 2016 be included? Seems like it should be the former and not the latter. Same type question for compensation test - for Plan # 1, are you looking solely at compensation during calendar year 2018, and HCE status under plan #2 for the plan year ending 9/30/19 is technically irrelevant?

Maybe to try to condense the question, for plan #1, is the HCE determination made solely under the normal plan #1 timeframes (but taking into account all employees of all members of the controlled group)? I believe this is how it works...

Anyone with experience with use of level funded health plan and Davis-Bacon?  Client has MEWA with a level funded health plan and would like to offer to employers subject to Davis-Bacon.  Would contribution of employer premium to MEWA sponsor be considered an "irrevocable contribution to an unrelated third party" under Reg. Sec. 5.26?  Since a level funded plan is a partially unfunded plan, we are trying to verify whether the contribution of the premium to the sponsor makes the plan a bona fide fringe plan, despite the fact that the plan is technically partially unfunded.  

I don't know what to make of this.  Client set up an LLC for himself.

He's also a partner in a larger company.  That LLC issued him a K-1 for his income, and then also issued his own separate (single member) LLC a K-1 as well for a separate source of income from the larger partnership.  It's that "smaller" LLC that sponsors his plans.

The first year, he had a Schedule C to reflect the payments from the smaller LLC to the individual.

Since then (the past 2-3 years), the income is not being shown as flowing through the smaller LLC - he just received it on a second K-1 issued by the larger company.  So I think that's wrong to use for purposes of funding his plans.

But - is it enough for the big LLC to pay the little LLC on that K-1, or does the little LLC then need to turn around and issue a Schedule C every year?  Or, is it enough that as the single member, the earnings on the K-1 (from big LLC paid to little LLC) enough to count as income for the individual himself?

We're trying to figure out if the CPA needs to re-address past years' tax statements, in terms of how the payments were reported, before we get into tracking what sort of benefit he's actually due under the DB plan.

thanks in advance....

--bri

We are planning on amending our plans in 2020 for the new hardship rules.  That includes the no more suspension of deferrals.

What happens is some takes a h'ship now?  Their suspension period would go until February.  Does the suspension just go away Jan 1?

Hi to All,

We have a 401(k) plan for a non-profit entity with a new comparability formula for the profit sharing.  The intention in the design was to have each participant in his own group and to vary the contribution level at will.  There are no HCEs and of course no "owners".  

Can the employer give 10% of pay to the 3 oldest employees and nothing to the 3 youngest employees?  Can the contribution be literally whatever they feel like giving to each person?

We are so accustomed to the world of small closely held companies that it's hard to think outside the parameters of normal non-discrimination testing. Our first instincts are to say "Oh no, you can't do that!" but perhaps you can!  Any thoughts?

Thank you as always.

I have a plan with a discretionary match that is calculated and deposited each payroll.     At the beginning of the year the board of directors elected to cap the match at 15% of compensation.      The payroll department didn't apply the 15% cap and 3 participants received excess match - 2 of them $4000 and $6000.         Is the cure for this error to forfeit the excess?    

Company A owns 20 other companies at 100% ownership. All 21 (20 plus company A) entities have their own separate plans with different record keepers, TPA's and financial advisers. No one has performed combined coverage testing for the past 15 years.  The plans vary from safe harbor to traditional 401k with profit sharing. All plans are small plans so on their own have not had an audit requirement. All plan year ends are calendar year.

Question: Is this an obvious VCP submission requiring them to go back and run coverage testing for X years? Or can this be self corrected? 

Thank you

If the employer over matched on deferrals because they got the formula wrong are the excess matching contributions fortified before ACP test is run or are they included in the ACP test? I read somewhere they are possibly excluded from the ACP testing and included in the general test. Yeesh. Any clarification would be appreciated, I feel like I'm making this more difficult than it actually is.

Anyone have a pipeline to the IRS on the likely date for approval of DC docs and the opening of the next restatement cycle? Is smart money still on 2021, or is there any likelihood of 2020? Would obviously make a big difference in our planning...

Group:

I may not state this properly so bear with me. 

Entity A, Inc. sells 100% of stock to an ESOP with name of 'A, Inc. ESOP AND PROFIT SHARING PLAN' in 2011.

ESOP files for EIN and uses such for all 5500 filings. 

Entity A is audited for tax year 2012 and 2013. Which resulted in a no change determination letter. 

Fast forward, Entity A ESOP is now under audit for same years (2012 and 2013) and all years  through 2017.

I'm coming in late to the proverbial game as 2848/attorney and client has already signed audit extensions prior to my involvement. 

Q: Are there any cited cases/internal revenue manual cites/other supporting sources, that stand for the proposition that the ESOP was effectively audited for 2012/2013 with these facts?  

I note there seems to be very little case law about whether or not these facts can support a collateral estoppel or res judicata argument. And it's usually not favorable to taxpayers. 

Thoughts and comments are appreciated. 

Thank you 

Joe Dadich, CPA, Esq. 

My uncle designated me as sole beneficiary of one of his bank accounts. His step daughter has POA (don't know what type). We live in California and the accounts are in a CA bank. Q: Can the step daughter change the beneficiary or close the accounts and take over the proceeds? My uncle is in a nursing home and starting to show signs of mild dementia but is still mostly aware and present. 

This is an old thread on the topic - does anyone have any more current insight? 

A plan sponsor is trying to get a contract with San Francisco - and would be subject to their equal benefits requirements.

Considering that a domestic partner cannot rollover money to their own IRA the way a spouse would be able to, I don't know how the plan sponsor can affirm that the distribution options are the same. They are not under current Federal tax law. As far as I can tell preemption applies, but is there something else I'm missing? And certainly step-children are not treated the same as regular children in retirement plans. Also the RMD upon participant death options are usually different depending on the type of beneficiary. 

Here is an except from the contract info page from the city / county: