Based on the work/life scenario listed below--- I was wondering what the maximum HSA contribution would be for both individuals for 2018. They both have separate HDHP's.

My daughter and her fiancé have a child together (1 year old ) but are not married. They live and share a home (rental) together.

She is claiming the child as a dependent because her income is well below $200,000 and she will be able to file as head of household and also will receive the full child tax credit of $2,000. She had a HSA (self only) for the entire year and contributed $3,450 this year. She is 39 years old. 

Her fiancé makes too much income to receive the child tax credit but has the child on his health insurance because the health facility/doctor choices are a little better.  He will file as single for tax purposes. He also has a HSA for 2018 and contributed $3,450 (self only). He is also 39 years old. 

My question is: Are they maximizing their contributions to each HSA and can he actually have a family HSA because the child is on his medical plan and contribute to his HSA as a family plan ($6900)?

Any guidance is much appreciated.

Thank you,

Rick S.  

Hypothetically, if we (US/ world) are heading into a recession, how would you protect your 401k investments now? Move your assets to bonds? Would you continue your future allocation as you have been or would you change it to bonds or something more secure?

If a plan has the same 1 month of service eligibility requirements for profit sharing as it does for deferrals, must the NHCEs all receive a PS minimum gateway allocation in a cross tested plan if they satisfied the one month wait?

Can you disaggregate otherwise excludables in this case? So, those that did not meet the statutory one year wait can actually receive $0.00 allocation?

I was under the impression that this would apply only if there was a separate one year wait on the PS component.

I would like clarification on this.

One of the plans we oversee had an NHCE who changed their deferral % from 6% to 10% in February. Somehow this got registered as 0% and for two pay periods, nothing was deducted. This should qualify under the "brief exclusion" rules.

The participant will end up getting the full match for the year because of her current 10% election and the fact that the sponsor does a true-up. Because this will qualify for "brief exclusion"  treatment, the employer is not required to make up the missed deferrals. However, the question has been asked - what if they WANT to make them up, even if not required to do so? Can they do so electively? 

Thanks,

Dog

I recently took over administration of a Cash Balance Plan that was effective in 2016.  When I reviewed the document I was a little concerned that under the Eligibility Section there was an exclusion for anyone other than Direct Owners, Spouses of Direct Owners and other HCE's.  I just assumed that the document was written in error or that they purposely did this to be able to add back in sufficient NHCE's to pass 401(a)(26) and 410(b).

Based on the printouts in the Actuarial Valuation Reports the Valuation Reports were run through Relius.  The 410(b) and 401(a)(4) tests all show "Pass" for 2016 and 2017.  However, when I reviewed the census information it appears that 8 employees out of 12 were coded as ineligible.  All 12 met the eligibility requirement of 1 YOS and age 21.  It is my understanding that the 8 "ineligible" participants should have been coded as Active with a $0 benefit.

Am I totally off base?  I would love to have some feedback before I go to a new client and say there is an issue with their prior years.

CPA has a plan with Morgan Stanley-- 401k/PS pooled account. He's allocating earnings based on salary (individual salary/total salary * gains/losses).  This gives someone who is eligible, but not participating,  a share of the gains/loss. Is this correct?

When changing advisors for a 401(k) plan, is it common to have a blackout period, even if the funds are staying at the same recordkeeper?

Can the Plan pay the expenses of a Trustee even if it is a Self-Trusteed Plan?

Sounds like a PT but since Owner is wearing the Trustee hat at that moment is it ok?

Thank you very much

Hi Folks,

TP is currently using a Nanny payroll provider that isn't doing a good job, and we need a new provider. They run a single member S Corp with payroll for themselves as officer, and have a boilerplate 401(k) plan (Solo/off the shelf).

Using a new 'Nanny specific' payroll firm (reporting on the Schedule H) not only is more costly, but adds a little more complexity than using one service. Perhaps most importantly though, running the wage through the S Corp's payroll provider will force frequent remittance of tax, rather than building a liability that may be overlooked until tax filing day.. and a sudden bill appears.

I see no issue in terms of a controlled group between the S Corp owner and the Nanny if paid via a third party payroll provider 'dedicated to Nanny tax' but wonder if bringing the Nanny onto the S Corp's payroll may cause an issue with ERISA in regards to there being an 'employee on the payroll that is not covered by the plan'. I've not seen a way to specifically exclude a household employee, but also am not sure if the Nanny is considered an employee of the S Corp simply if paid via the S Corp..?

Naturally, would carve out costs of payroll so that the Nanny wages and taxes are not deducted to the business.

Thoughts?

This is a case where I was SO sure I knew the rules and it appears that I do not!  

A client has a Top Heavy 401(k) plan with deferrals, Safe Harbor enhanced 4% match, and integrated profit sharing.  They use all of it - maxing out the doctor/owner via the profit sharing contribution and contributing whatever is required for the rank and file. The profit sharing has a last day and 1000 hour requirement.

One participant worked less than 1000 hours every year except for 2014.  That one and only year, she got her 1000 hours, met eligibility for the first time and got into the plan.  For 2015, she did not defer and of course did not get a match, but she got the 3% TH minimum.  In 2016 she began deferring 4% of pay  and got the SH match but NO profit sharing.  In 2017, same thing.  I was working on 2018, noticed that once again, she deferred and got the SH match but no profit sharing at all.  

I thought we had made a mistake in 2016 and 2017 and were about to make a mistake in 2018 by not giving her the TH minimum 3% in addition to her SH match.  I knew that if a plan had ONLY SH Match and no profit sharing at all, then the Top Heavy requirements were deemed to be satisfied.  But I believed that from the moment you gave the HCEs 3% or more in profit sharing, you had to be sure that all of the NHCE participants got at least 3%, even those who didn't work 1000 hours.

I questioned the software vendor as to why the under 1000 hours participant did not receive a 3% TH minimum for 2016-2018 and I was told that the employer doesn't have to give her a TH minimum 3% profit sharing contribution because she got 4% in SH Match and that takes care of it.  

So if there had been 4 under 1000 hours participants in the plan, and 2 deferred 4% of pay and 2 deferred nothing,  the 2 who deferred and got the SH match get NO profit sharing, and the 2 who didn't defer anything would get the Top Heavy minimum 3%?  That hardly seems fair or right, but what do I know......

I just want to run this up the flag pole and be sure that others agree.  If this is really right, so be it - what do you say?

Thanks as always.

We sent a terminated 401(k) Participant a letter stating we would roll their account into an IRA if they did not return a distribution form.  At the time their account balance was < $5,000.  Now, 45 days later, we have not heard back, but their account balance has increased to > $5,000.  Can they still be forced out of the Plan?

HCE defers $6,000 for 2018. He's over 50.

Employer makes a $55,000 profit sharing for him.  Total Annual Additions $61,000. $6,000 is catch-up.

What do I put in the ADP test?  $6,000 or $0.

Hi all,

I am working on a plan that is Top Heavy and is only allocating a 3% nonelective Safe Harbor for the Plan Year. No other employer contributions or forfeitures.

The plan excludes compensation while not a participant, so I have allocated a Safe Harbor contribution to a participant based on her partial year compensation.  I did so because I thought that Top Heavy minimums were waived if the only contribution was the Safe Harbor.

I am being questioned on why I did not allocate Safe Harbor based on the participants full year gross compensation.

I cannot find documentation showing which way is correct ( I am hoping mine is). 

Could anyone point me in the direction of a regulation that says a plan is exempt from the TH minimums as it is not considered TH in a year when the only contribution is a SH?

And if this is correct, do you agree that the SH can be allocated on partial year compensation?

Thank you all so much!

A participant's loan was deemed in 2014. He received a 2014 1099-R for the balance. However, a loan payment was applied to the loan balance in 2015 and the loan was deemed again later that year. He received a 2015 1099-R for the balance. Should one of the 1099-Rs been reversed? The participant is currently an active employee.

Sponsor of SIMPLE IRA has employee who did not elect to defer until mid year.  Then she deferred 7% until the end of the year.  Employer pays match up to 3% each pay period.  At end of year, the employee had averaged, say, 3.5% and should receive 3% match on full year compensation.  Employer says he doesn't want to pay true-up, that he put it in each pay period and because she chose not to start making deferrals until mid year, he should not have to pay the additional match.

Is that an option in a SIMPLE IRA?

What are the risks of not making the additional match contribution?

The employee is unaware that she may be entitled to additional ER match.

Thanks!

Employer switched payroll companies mid-year 2018.  Due to some type of error participant defers $20,000 during 2018, but the relevant parties (participant, employer, payroll company) think that only $18,500 has been deferred.  The participant is catch-up eligible.  The issue is that W-2 was prepared and taxes filed assuming a contribution of $18,500.  

Is there any way to get around this, other than by amending the W-2 and tax return?  Employer prefers that it be distributed to the participant similar to an excess deferral, participant is okay with that, but I'm not aware of anything that allows that.

Thanks in advance for any guidance.    

Hello! First time here. It's great to see so many HR professionals and the advice you're giving here is invaluable.

I've created this infographic about employer benefit trends throughout 2019 and into 2020. It includes benefits that employers are trying that you may not have even heard of. Take a look and let me know what you think.

Here is the source for this graphic. Custom HCM Software Development

Thanks!

participant want to take ISWD of $50,000 from his Roth 401k account.  He is over age 59 1/2 and has me the five year rule on his roth contributions.   My question is - when the money comes out do you have to split between basis and earnings on that amount?  It should all be non-taxable because he met the requirements but so is there any reason we need to determine the amount of the earnings attributable to the amount being taken out of the plan?

Who must receive a Form 1095-C per the instructions:  Employer must file a Form 1095-C for each employee who was a full-time employee for any month of the calendar year.  So if an employee was not employed an entire calendar month, then they don't receive a Form 1095-C?  They were regularly scheduled to work 30 hours a week.  For example, employee was hired 5/16/18 and term'd 6/20/18.  They were in the 90 day waiting period.  Don't give them a 1095-C?