This is ridiculous and almost suggests that the IRS doesn't understand their own rules.

This has happened to us 3 times in the last 4 or 5 months. Client rolled money from an IRA into a 401k plan.  IRA sends out a 1099-R with a Code G.  The IRS sends my client a letter that he owes $X Thousand in taxes (which of course the client freaks out about) claiming that they received no corresponding 5498 confirming the rollover.  But of course 401k plans don;t send 5498s when they receive rollovers.  Can anyone else see the flaw in the system?

Has anyone brought this to their attention?  We literally have a template letter that we use now to respond.  That's ridiculous.

Under universal eligibility for 403(b) Plans, I understand all employees working at a rate of at least 20 hours per week are eligible to participate, immediately. 

Say an employee enters the plan due to hiring status as full time.  Year later that employee goes part time. Can they be stopped from continuing to make contributions? I did not think so.

Alternatively, say they start making contributions, then later in the year it is determined they will not hvae worked 1000 hours during the year, can the plan sponsor refund the contributions and deem them ineligible?

We want to do an early retirement window where if participants agree to retire, they get an extra 2 years of service and 2 years of age.  For most of our "over-65" folks, the extra service and years won't help them, as they are more or less maxed out in the plan. 

Is this OK?  Can we offer an early retirement window that benefits people under 65 more than people over 65?

Secondly, do early withdrawal penalties apply the same for people who retire during an early retirement window.  If I terminate employment because of the early retirement window at 54, am I still subject to the 10% penalty, even if the plan is treating me as older for purposes of the window?

When is a contribution considered to be made "by the tax filing deadline?" in regards to being deductible for that plan year?  We have a client who waited until the last day to file their taxes - and to submit their annual employer match on that same afternoon. The submission missed the record-keeper's daily cut-off for the ACH pull, so funds were not pulled from the employer bank account until the next day - the day after their tax filing deadline. The funds were deposited to the plan's trust the following day. 

Is the contribution considered "made" when the transaction is submitted online? Or when the ACH actually pulls? Or when the assets are actually deposited to the trust? 

Thank you for any assistance!

Client has combo DB/DC plan.  For entire plan year, the DB plan is frozen.  For the same plan year, employer makes no PS or match to DC plan and no key employees make 401(k) contributions.  Only contributions for that plan year to the DC plan are non-key employee 401(k)'s.  

Both plans are top heavy.

Is any top heavy minimum due for the plan year?

Parent is 100% owner of Company.  Company has an ESPP under which participants can purchase stock of Company.  Parent is selling off Company but wants to continue to offer ESPP benefits, but now participants will have the opportunity to purchase Parent stock, rather than Company stock.  We have two choices -- one is to transfer the ESPP from Company to Parent; the other is to terminate the ESPP and start a new ESPP at the parent level.

Is there any difference as far as securities concerns go?  For example, would Parent need shareholder approval either way?  Or would transferring the ESPP, as opposed to establishing a new ESPP, save us some of the hassle of setting up an entirely new plan?

If plan excludes bonuses from the definition of compensation for matching allocations, isn't it correct that ADP and ACP testing can still be done using total gross comp?  

So there's a nonprofit that has an individual who has worked there for eight years (and founded the nonprofit). Over the years this individual took no money but there was an oral agreement with the board that she was owed a deferred salary of 20K per year, which will be paid the year after the individual's departure (at a rate of no less than 20K per year). This individual is about ready to depart the organization and only now wants to in writing. Obviously, since this is a nonprofit and deals with deferred compensation, this seems like it would fall under a 457 plan. Could it be considered a top hat plan (obviously not a highly-compensated person, but considered a member of a select group of management)? 457(b) or 457(f)? Any help would be appreciated. 

Company was changing recordkeeper for 401k plan. They got locked out of outgoing custodian and new one could not set up in time, so they missed timely deposits for one month. After they were advised the late amount that would show up on their 5500 and the lost earnings deposit due (<$100), they have resisted and they believe due to intention, they are not at fault. Contemplating how to handle

Does anyone have any experience with Open MEPs?  Employer was spun from a Open MEP mid way through 2017.   Through 2016, the Employer filed their audited 5500 every year.   Instructions do not seem to allow for the separate filing per participating employer.  The only thing we can come up with is the AICPA guideline below.  Does anyone know why they would advise separate 5500's per employer with separate audits?  Secondly, if assets were physically under the MEP the first part of the year wouldn't there be a need for a final "short" year of assets under the MEP and short start up plan year for the stand alone plan?  Would it matter if the start up document was effective 1/1/17?  CPA is confused as to how to audit 2017 when the assets were under the MEP.

If the common interest criteria is not met (as is usually the case with open MEPs and many MEWAs), each adopting employer is considered to be maintaining a separate plan for the benefit of its own employees. Consequently, each adopting employer would have a Form 5500 filing requirement and potentially an audit requirement (depending on the number of plan participants). However, there is a special exception for a MEWA that qualifies as a group insurance arrangement (GIA). A GIA exists if the MEWA’s welfare benefits are fully insured, the insurance contracts are held by a trust or other entity, and a trust is used as the conduit for payment of the premiums to the insurance company. If a MEWA that meets these requirements files one Form 5500 with audited financial statements as a GIA, then the adopting employers do not need to file Form 5500.

https://www.aicpa.org/content/dam/aicpa/interestareas/employeebenefitplanauditquality/resources/ebpaqcprimers/downloadabledocuments/ebpaqc-multiple-employer-plans-primer.pdf

An owner-participant who has W-2 income defers $18,000 in 2017.  He wants to max his contributions for the year.  

Is it permissible to recharacterize $6,000 of the $18,000 as catch-up so the owner-employee can receive $60,000 in aggregate, or is he limited to $54,000 because he failed to make an additional $6,000 in catch-up?

I read through 414(v) and I don't see anything that discusses recharacterization except in the event of ADP test failure.  I don't see anything that says you can recharacterize a portion of your deferrals as catch-up so that you can get more Profit Sharing.

Any thoughts?

We need guidance to determine if we need to provide more information than we have in the past and determine how to identify experience rated groups per the definition by the DOL.   

Five companies have adopted a plan.  There are three owners.  Company A & B are owned 100% by owner 1.  He also owns 33% of company C.  Company A and C have negative self-employment earnings on the K-1.  Company B is positive income.  When combined, the net income is negative.  Can he defer from the positive compensation earned through Company B?

I think the other way to ask is - do I consider the compensation from Companies A & C to be ZERO or do I actually use the negative number when determining 415 compensation? 

Thanks,

Kathryn 

We are taking on a new client that adopted an individually designed plan in 2009.  It was never updated beyond that date.  Furthermore, the existing document is questionable, and there is no determination letter.

The client is not interested in going through VCP because the new fee structure along with the fees we would be charging to correct are too costly.

I am not comfortable taking on a client whose document is out of compliance.  At the very least, I feel we should go through all of the steps you would go through if you were going to submit the document through VCP.  Then leave it up to them to file the submission.  

What is our culpability if they fail to submit?  What have others done in this situation?

Thanks!

A plan terminates in 2016 and funds were distributed.

Company opens new plan for 2018.

Are those plan distributions added back in as in-service withdrawals for 5 years?

If a group offers a DCFSA plan on an off calendar year (02/01-01/30), can an employee change payroll contributions so that his entire election amount ($5000) worth of contributions to be reported on his W-2 for the calendar year and stop contributions for the last month of the plan year (Jan)?  If allowed, will this impact the new plan year election amount? 

3 Plans that must be aggregated for testing.  

all 3 plan are safe harbor match.  1 plan with most of the HCE is immediate entry for SHMC.  the other 2 plans are 21, 1year and dual entry for SHMC

the regs say for SHMC to satisfy the adp/acp testing, the "rate" cannot be greater for the HCE than non-highly.  If my highly are getting it immediately and non-highly have to wait a year and dual entry in the other plans, am I required to run adp? acp? both

For the schedule of reportable transactions (schedule 4i), should the activity be listed at a fund level (if many investments within the fund) or at an investment level?

CPA is telling me that a maximum deduction is:

Schedule C - 1/2 SE - Medical Ins. = Max Deduction

51,320 - 3,626 - 14,400 = 33,294 and I get $33,539

I have never heard of a Medical Ins offset limiting the contribution.

Have I learned something today (and so its time to go home?)

Thank you

Can anyone tell me a reason for choosing ADP Safe Harbor only in the Adoption Agreement?  Why wouldn't you always choose ADP and ACP Safe Harbor?