We have a client who established a SEP with Schwab in 2007 using their protoype documents.

In 2016 they opened SEP IRA accounts with TDA and transferred all their Schwab dollars to TDA.  They also made a contribution in 2016 directly to the TDA accounts. They did not update the documents of the plan.

Is there a problem with using Schwab protoype documents, but opening and contributing directly to TDA accounts without re-stating the plan?

Formula for determining earnings on refunds is earnings * excess/(Beginning balance plus contributions for the plan year).  What does contributions for the plan year mean?  Does it have to recognize all contributions including receivables?  If not, why not?

We have a client that has purchased the assets of another company with a chain of retail stores.  The purchasee maintained a 401k.  The new owner established a new 401k  as sponsor, with eligibility waived as of the effective date for those hired prior to effective date of new plan.

Technically, there are over 100 participants as of the first day of the initial plan year.  An IAR would follow in year#2 as per question on Form 5500.

According to instructions form 5500, the initial plan year would show 0 participants at beginning of the initial year and, of course, initial year would be marked.

CPA seems to think show actual # participants who would be eligible to enter plan 1/1.  Would’t this create a warning with EFTPS and a letter or notice be generated from IRS?

Suggestions?

Is there a threshold for not going through EFTPS and instead mailing  withheld amount to IRS with 945-V.  Form 945 under $2500 does not require dates of payment.

Hello,

A new member and would like to thank all contributors here on this forum. Have been going over some posts and found them to be very informative.

My question:

I have a sole prop (and a Self-employed 401k plan with Fidelity) for the past few years.

Earlier this year I've created a new entity - A 'S' corp and "gradually" moved all contracts to that 'S' corp. 

The sole prop will be out of existence after this year.

My understanding is that I can use my existing Sole Prop 401k plan with my 'S' corp. I need to change the Sponsor name and EIN on 5500SF and that would work.

Does anyone see any issue with this? OR

Is it better to create a brand new plan under new 'S' corp and transfer assets from my Sole prop 401k plan to the new plan and then terminate the old plan?

Thank you for your assistance.

I have 2 companies that have a multiple employer plan. 

My question has to do with the compensation for the owner. I have an owner who owns 100% of Company A and 50% of Company B. This owner receives W2 compensation from both companies. I am wondering how I actually test the plan?

Do I have this owner in both companies' separate testings and give them an allocation in both? (They want to do the max) Or am i allowed to aggregate the compensation and only have the owner in one company's testing? I am leaning toward the first way as I feel they do need to be tested under each employer, but I cannot find a definitive answer anywhere.  

I do know that the 415 limit is based on the compensation the owner receives from both employers. 

The FIRE Production System will be down from 6 p.m. ET December 8, 2017, through January 7, 2018, for yearly updates. A controlled launch is scheduled for January 8-10, 2018, from 8 a.m. ET to 4 p.m. ET. The FIRE Production System will be available on January 16, 2018. An alert will be posted on the FIRE webpage if the system is available prior to January 16, 2018.

Company is starting a calendar non-safe harbor 401k plan, document to be signed 11/15/17.  The plan is effective retroactively to 1/1/17.  401k is effective 11/15/17.  415 limits therefore are not prorated.  We will use current year testing.

The owners, due to December bonuses, could deposit $10K+ in 401(k) contributions before end of 2017. Giving them a high ADR.  The NHCEs would not be that high.

A QNEC is being considered, which will cost $$$, but the question is whether the QNEC uses full year compensation as a basis or just the compensation from 11/15-12/31?  This would obviously make a big difference in the QNEC.  Hoping that 11/15-12/31 can be used.

Thanks for any comments

'

COBRA is outrageously priced.  Are there any associations (in Arizona or nationally) for Arizona retired primary and secondary teachers that offer a reasonably priced group Health Care Plan?  Most primary and secondary teachers retire at age 52 and have to wait 13+ years for Medicare eligability.  Any one with a lead for these people?

Specifically, how does one determine if a NQDC is a "restoration" plan.  Must the plan type be explicitly stated in the plan documents?  What specific language in the plan documents should I be looking for?

For background, I manage investments for a number of Walmart Associates, some of whom defer salary and/or bonus in the employer plan.  Thanks in advance.  Scott

If a plan has Employer Nonelective Contributions for union employees only, does it need to be in the SPD or it okay for this contribution to only be addressed in the Collective Bargaining Agreement? The employer doesn't want the whole employee population to know that the union match is more than theirs. 

Hoping for any comments as to whether this would fly or not:

We have a small employer looking to start a safe harbor 401k for 2017.  Its 11/10/17 so the deadline for 2017 has long passed.

However, could they start one 12/15/217 and have the plan year run from 12/15/17 - 12/14/18.  Have a short plan year 12/15/18 - 12/31/18.  Then, go to calendar year for 2019.  Their company fiscal year is calendar, so does that automatically sink this idea?

They have 3 employees, 2 of which are owners.  The owners would be receiving large bonuses which they could make in late December, 2017, with the owners deferring most of that to the 401k plan in late 2017.  They then have 11+ months to make 2018 deferrals.  do nothing for the 16 day SPyear, and then pick up on a calendar year basis for 2019.  The other employee will not be putting anything into the plan. given what is likely to be a high contribution rate for the 2 HCEs for 2017, a QNEC for the other employee would be pretty expensive and not desirable.

Thanks

Employer has an EACA plan and auto enrolls participants at 4%. They now what to add auto escalation at 1% up to 10%. Question -  Since this is an EACA Plan, is the employer prohibited  ( regulatory restriction vs document restriction) from including the  participants who made an affirmative election in the auto escalation?

For example Jane defers 5% of pay - can she be included in the auto escalation annually? Realize she can decline the auto escalation during the notice period.

Can an employee participating in a Cafeteria Plan FSA also establish and use a HSA?

What do you all think of using 3% instead of actually calculating the ADP?

One very large company wants to use 3%.  Is there any regulatory backing for this position?

Hi All,

My wife's employer caps her 401K deferrals at 15% of her salary. She gives the 15% max but it isn’t enough to reach the $18,000 max for annual deferrals. She is over 50 but also not allowed to make “catch up contributions” due to the fact that she hasn’t reached the $18,000 limit. She wants to put more money into her 401K but cannot do so due to these restrictions. It seems these restrictions are extremely unfair to those employees who cannot max out the $18,000 deferral limit with a strict 15% cap on deferrals. Are these restrictions allowed by law? Shouldn’t she be able to contribute more? It seems completely unfair to restrict her deferrals in this manner.

If the proposal goes through to eliminate 457(f) does that affect the following plan design:

$50,000 per year, vested in 5 years if continuously employed. Amounts paid out 30 days after vesting.

I thought that was just the simple constructive receipt doctrine which is still in tact. Eliminating 457f I would think does not impact that?

Clearly once it is vested it must be paid.  I realize that if 457f goes away the option for the participant to pay the taxes independently and leave the balances in their deferred is no longer an option (but for practical reasons I've never used that anyway).   

So here's a new one for me:  We have a client who has not funded the employer contributions to the plan since 2013.  He would like to take a loan from his account under the plan and use that money to fund the plan.  The kicker is that he has already defaulted on a prior loan.  The loan policy could be amended to permit him to take a loan even after a default and we could include the prior loan and missed interest when calculating how much he can take out to fund the plan.  BUT, this isn't passing my smell test.  I fear this would be considered a prohibited transaction because it's the employer who already defaulted, and while he may use the money to fund the plan, he might not pay it back again.

Thoughts?

If an employer qualifies for the hurricane Irma tax relief extension until 1/31/2018 for 2016 returns, do they also have until that date to adopt a SEP for 2016?

A year of service for vesting is 1,000 hours in a plan year.    A SALARIED employee worked 5 months and was salaried for 881 hours during that time, but he worked overtime and had  actual hours worked  of 1,055.   

 Would he get a year of vesting since he actually worked over 1,000 hours?     My first thought is yes.