Before starting, I have read the helpful threads here about tip income.

My client pays out credit card tip income at the end of each shift.  None is run through payroll.  Obviously 401(k) deferrals cannot be withheld from cash tips. (the election percentage is based on gross wages including tips, yes, the cash cannot be paid back to the employer to cover that withholding)  The question is, is the employer responsible for withholding from credit card tips if they cash them out on a per shift basis?  Would they not have to be considered similar to cash tips in that case?

They have a safe harbor plan and cannot exclude tips from the definition of compensation or from salary deferral election without it being discriminatory.

Their auditor states that they are required to hold on to those credit card tips until sufficient withholdings are met.  There are obviously times when the net check is zero prior to being able to withhold 401(k) contributions, or where the full election cannot be withheld.

Thanks in advance for any advice.

Is anybody going to apply the new hardship rules January 1, 2019 or are you waiting for IRS guidance?   Our relationship managers are pushing to implement January 1 and our document provider (FTW) is not going to update the document until the IRS issues guidance.     Fidelity is implementing January 1.    What are other document providers like ASC, R.A., etc. doing?    Thank you

When will each of the recent pension relief rules we've been living under (MAP21, HATFA, etc.) expire?  Will it be a big deal? 

Employer had two late deposits during 2017.    If they correct it on their own, and deposit lost earnings, are they required to file a Form 5330 with the excise tax?   

5500s now ask for a MyPAA confirmation number for plans covered by PBGC.

What do you do if the plan is covered but you have no confirmation #?

What if you check Not Determined?  What if you force it through EFAST - will it accept it?

I am being asked if there is a legal requirement to produce notices in Spanish or other languages for people whose primary language isn't English.

Mind you the client agrees it is a good idea and is trying to get translations done.  They just want to know if there is a requirement and if so which notices. 

I'm looking at a plan currently with pro-rata allocation.  Plan includes both union and non-union employees.  Employer is considering giving different allocations to union and non-union.  If union employees are eligible for plan and allocation, can they still be excluded from 410(b) and 401(a)(4) as statutory exclusions?  Thanks.

When calculating the Age 70.5 Required Minimum Distribution on a participant account holding a life insurance policy, regarding the life insurance policy, does the RMD calculation include the value of the death benefit, does it use the cash value for the calculation, or does it include both?

Does anyone have any thoughts on what the likelihood is that the IRS will assess penalties under Code Section 6721 on a hypothetical ALE that failed (for no reason other than a lack of knowledge of the requirement) to timely file with the IRS Forms 1094-B and/or 1095-C for 2016?

Plan sponsor wants to reduce number of active investment vendors under the 457(b) plan from 5 to 3.  They will close the 2 discontinued investment vehicles to new contributions,  but will allow participants to keep their current balances in those investment vehicles (for now). Going forward, new contributions may only be made to the 3 remaining vendors. 

I can't find anything under federal, state or relevant local law that governs these changes or addresses any participant notice or timing requirements).  Other than any potential collective bargaining agreements, am I missing anything?

 Is there a required notice period?

A fiscal year TIAA plan was amended for the last plan year to change their 100% vested employer match to an enhanced Safe Harbor Match. The plan sponsor continued to deposit the SH Match in the match accounts instead of setting up a SH Match account.  Should they just approach TIAA to have them move the SH into its own account along with allocable yield?

For bankrupt employers, HATFA §2003(c) generally revised IRC §436(d)(2) to provide that the AFTAP is determined without regard to the adjustment of the segment rates under IRC §430(h)(2)(C)(iv) to determine benefit restriction under §436(d)(2) . For non-collectively bargained plans, the statutory amendment deadline was the last day of the 2016 plan year with the IRS having authority to extend this deadline. Question: Has this deadline been extended by the IRS, if so, to when? Also, what is the remedial amendment period that applies here if the deadline was missed. For example, even though non-collectively bargained, would this plan be eligible for the extended remedial amendment period under Notice 2016-80, i.e., 12/31/2018.

Good afternoon.

I am looking for some recommendations for vendors who can provide plan documents and other services for starting a 457b plan for a small charity where there will be less than 5 participants (probably just 2-3).

Thank you,

I have a client with a db plan who has reached age 62 and has a 415 max lump sum available to him (of $2.8M).  I'm not an actuary, so please bear with me.  I've been told that the maximum lump sum actually declines from age 62 to age 65.  Is that correct?

Also, the plan's about $500k short on assets currently.  The client is the 100% owner.  Do they still have substantial owner waivers?

Finally, if the client decides to fund the shortfall so that he gets his full $2.8M, does he need to do that all in one shot?  What if he wants to fund it over the next 12 months or so?  Do I have to worry about his 415 LS going down?

Thanks so much for your help...!!!

Employer has 401k and 457b plan.  An HCE will terminate 1/1/19.  He thinks he can take a distribution from the 457b plan, and have that count as compensation for the 401k plan (which he could defer on and get matched.)

I don't work on 457b plans but this doesn't seem right (?)  The document says compensation excludes payments received by a nonqualified unfunded deferred compensation plan, only if the payment would have been paid to the employee at the same time if the employee had continued in employment.

How do the 457b and 401k rules integrate with respect to compensation?  Thank you!

Hello. 

Company A's business entity is partnership.  There are 6 owners of company A   Two of the partners' net earnings are negative before any calculations are made.  Profit sharing amount is determined for rank and file employees.  Do these owners also receive a share of the cost of the profit sharing (based on their ownership %)  taking their earned income to a greater negative amount?

Since there earned income  for plan purposes is negative, we are reflecting their comp as zero.  Should these two partners be included on the ADP/ACP test?

Under the 409A exemption for stock rights, an "option":

means the right or privilege of an individual to purchase stock from a corporation by virtue of an offer of the corporation....

If you have an otherwise exempt option (i.e., it meets all the substantive exemption requirements of nonqualified stock options) but the option is to purchase employer stock from the majority shareholder of the employer, do you still meet the 409A exemption? 

The definition in the 409A regs is carried over from Section 421. Also, Section 83 has rules governing the purchase of employer stock from another shareholder in connection with the optionee's performance of services for the employer. It treats the transaction as being routed through the employer for tax purposes. I see no cross-reference or carryover of a similar concept under the 409A regs.

Thoughts?

EDIT: On further reflection, because the tax treatment is already fixed under Section 83, could the option be issued directly from the employer, then the controlling shareholder could have the same number of his shares redeemed by the employer upon the optionee's exercise? That avoids dilution of the minority shareholders, which was the original goal. 

Issue 1.  Ineligible participation:  Plan sponsor allowed an ineligible employee to participate in the plan too early during 2017.  For whatever reason, the client does not want to retro-actively amend to correct this specific person's participation.   This plan processed a refund of the deferral and forfeiture of the affected employer match today, 10/9.  (Yes, today.  Don't get me started on that story.)

Issue 2. ADP-ACP refunds:  The plan is also tested; failed ADP-ACP (of course) and corrective refunds are being processed.  Again, it is October.  Obviously, well past 3/15.

12/31/2017-ending plan year...  Both issues occurred in the same tax year and being corrected in subsequent (current) year.  I am either rusty, brain-mushy, or both...  But, I cannot seem to recall and need a solid favor here, my friends.  Please provide a quick sanity check: Can we report both of these bad boys on one 5330...  Yay?  Nay? 

For any replies, please accept advanced thanks!

What is the difference between a VCP filing and VFCP filing? I understand one is for operational failures, and the other for fiduciary violations, but can they ever overlap? Are you ever required to file both?

We are the actuaries on a plan the IRS is reviewing to see if the plan meet's 401(a)(26) meaningful benefits. 

The IRS actuary is taking the position that meaningful benefits are determined by taking the end of year total accrued benefit, dividing it by years of credited service and then dividing by testing compensation.  The actuary then compared this result to see if it meets the "0.5% meaningful test".  

Using the accrued benefit seems contrary to our understanding of 401(a)(26).   All information we have on this points to using just the annual credit (as an annuity) and dividing by testing pay.  

Does anyone have any thoughts on this?  Also, has anyone else seen this interpretation by the IRS? 

Thank you.