We have a takeover DB plan for 2017 & we're working on 2017 now . . .

Client made a $220K contribution in Sept, 2017 for 2016 & $20K was needed for minimum funding purposes for 2016.  Prior actuary prepared SB detailing this contribution. While balancing the trust, we discover that the client contributed shares of stock to the plan & not cash.  

Now what?

We're got a PT that needs to be fixed (by selling the shares that were originally contributed in Sept. 2017) & excise taxes to be paid for 2017 & 2018.  Does the client still receive the 2016 deduction?  Does our actuary need to amend the 2016 SB?  Any other issues that I'm missing?  

Thanks! 

We have made payments to an employee on her dependent care FSA claims in error as her account was not funded to cover them.  She is now leaving the organization and wondering if we can recoup the funds paid in error from her last paycheck?

Thank you!

Have a client that is paying two employees on 1099's  for cleaning services in addition to their normal w-2 wages.   The employer has a simple plan and the employees are participating in the simple plan for their w-2 wages.   The work is different than their normal jobs but they use the facilities of the employer and the cleaning is in the same office that they work in during the day.  

My concern is that the work cleaning after hours should be included with regular wages and thus they should be able to defer on that money as well.    I know this may not be the correct area to post this as it is more a contract labor vs employee subject.  

Having difficulty finding providers to underwrite a SELLER 4204 bond in connection with seller's liquidation.  Plans are often reluctant not to waive that requirement under the PBGC memorandum.  Has anyone had good success obtaining such bonds?

A plan has last day requirement for Discretionary nonelective.  If an employee becomes an agency temp midyear, is he employed on the last day?

I believe the answer is no.  But I am not certain.  Am I missing anything?

What has me doubting myself is the fact that we count hours as a temp when the person becomes a full time employee.

The owner of an IRA engaged in a PT in 2011.

We know the consequence is all assets in the IRA are treated as having been distributed to the owner at their 1/1/2011 value and the account is no longer an IRA as of that date.

We're planning on filing amended individual income tax returns for 2011 and forward and reporting the deemed distribution on the 2011 return (fortunately the owner was over 59 1/2). We'll also report all investment income/expenses and realized gains/losses in the account as adjustments on the amended individual returns along with backing out the RMDs.

We're assuming the investment holding period for purposes of determining whether realized gains/losses are short or long term started at the 1/1/2011 deemed distribution date.

Does this sound like the correct reporting? Does the IRA custodian have to file amended 1099-Rs and Forms 5498? Anything in the way of other disclosures/reporting that we should be concerned about?

Thanks

If a company realizes that it overpaid its portion of H&W premium per pay period for all of 2017 which resulted in an employee 1) not to have their portion deducted pre-tax (since ER credit was enough) and 2) to have additional taxable income can the ER create a payment plan to recover the overpayment in 2018 (per pay period)? ACA considerations (e.g., affordability of coverage in 2018 because paying for benefits of 2017 in new year)? Any thoughts are appreciated. Thanks.

Every public employee in the State of New Jersey may make voluntary after-tax contributions to the NJ Supplemental Annuity Collective Trust (SACT -Regular Plan).

Let's assume one has contributed for 40 years and is about to retire.  May the account  balance be rolled over to a Roth IRA?

Posted elsewhere with no responses.

Safe Harbor 4% Match 401(k) Plan with Integrated Profit-Sharing.  Owner (over 60, HCE) with 5 other employees (one is HCE).  In 2016, Owner maxes 401(k) at $24K, matches $8K and contributes to PS, resulting in his PS allocation being $33,000 per the Plan formula, resulting in him being $6k over 415(c) limit.

I'm reading Rev. Proc. 2016-51, Part III, Section 6.06 (not Notice 2016-60 erroneously cited), which says (emphasis mine):

• (2) Correction of Excess Allocations. In general, an Excess Allocation is corrected in accordance with the Reduction of Account Balance Correction Method set forth in this paragraph. Under this method, the account balance of an employee who received an Excess Allocation is reduced by the Excess Allocation (adjusted for Earnings). If the Excess Allocation would have been allocated to other employees in the year of the failure had the failure not occurred, then that amount (adjusted for Earnings) is reallocated to those employees in accordance with the plan’s allocation formula. If the improperly allocated amount would not have been allocated to other employees absent the failure, that amount (adjusted for Earnings) is placed in a separate account that is not allocated on behalf of any participant or beneficiary (an unallocated account) established for the purpose of holding Excess Allocations, adjusted for Earnings, to be used to reduce employer contributions (other than elective deferrals) in the current year or succeeding year.  While such amounts remain in the unallocated account, the employer is not permitted to make contributions to the plan other than elective deferrals.

Can I calculate 2017 max PS to get owner to $60K (401k, Match and PS) using up the 2016 $6K overage plus whatever else needed?  Anything I'm leaving out?

Person terminated on last workday of 2017, which is Friday 12/29/2017.  For the profit sharing allocation the person must be there on the last day of the year (12/31).  Since that is not possible for this firm (closed on weekends), is the person deemed to have been there on the last day, and qualify for the allocation? 

Also, how does this last day is Sunday impact coverage (and other) testing?

If our plan is not a safe harbor plan, can we impose a one year suspension for a hardship withdrawal or does it have to be 6 months? If one year is acceptable can someone direct me to the code that backs that up? Thank you!

Let's say a participant terminates in December of 2017. However, he has a final paycheck payable in the first few weeks of 2018 for services performed in 2017. The plan document states that the compensation paid during the first few weeks of the next plan year is excluded. So, would that final paycheck be excluded from both 2017 and 2018 compensation for testing purposes? If so, what if the participant deferred something from that paycheck. Would that deferral be excluded for testing purposes as well?

We have a client that needs to take an in-service distribution from his profit sharing plan, which does allow for in-service distributions.

Since the client is under 59 ½, obviously the pre-mature distriibtion 10% applies; as well the 20% withholding?

The client was told by her accountant that as long as the funds were repaid within 60 days, this would not be a taxable event.

I do not think he is correct.

A plan sponsor has been acquiring a number of companies over the last few years, most of which already had 401(k) plans in existence.  To date they have continued the separate plans though they do want to consolidate them by the end of 2018 if possible.  

One of the companies they acquired has a 401(k) on the standardized adoption agreement from a payroll company. As expected, the plan document extends the plan to all employees of all affiliated entities (relevant plan language pasted below).  There are 4 entities with plans, all a parent-sub controlled group.  The other 3 plans have 400 participants and $8 million.  The one offending standardized plan has 2 participants and $90K.  They are well beyond 410(b)(6)(c) now. 

I've recommended amending that plan with a non-standardized or volume submitter plan ASAP to fix the issue going forward.  It's an operational failure in that the plan operations don't follow the terms of the document, but there is no way to conform plan operations to the document.  I've suggested a VCP application to allow a retroactive correction of the plan document to exclude the related entities. The client wants their plans compliant but realistically this is a tiny plan and its failure does not put the other plans at risk.  

Anyone here have any experience with this issue in VCP or other ways to resolve?  Thanks.

______________________________________________________________________________________

Document language:

10.7.5 Notwithstanding Sections 10.7.1 through 10.7.4, with respect to a Company that utilizes the Standardized Adoption Agreement, all Affiliates must participate, and the express written consent of the Company shall not be required, unless an election is made under the Adoption Agreement to utilize the Code §410(b)(6)(C) transitional rule.

An Affiliate is defined in the plan as follows:

1.1.5 Affiliate:

(a) Any corporation which is a member of a “controlled group of corporations” (as defined in Code §414(b)) which includes the Company;

(b) any trade or business under common control” (as defined in Code §414(c)) with the Company;

(c) any organization which is a member of an “affiliated service group” (as defined in Code §414(m)) which includes the Company;

(d) any other entity required to be aggregated with the Company pursuant to regulations promulgated by the Secretary of the Treasury under Code §414(o); or

(e) for entities that are not trades or businesses, in accordance with IRS guidelines as published from time to time.

Under the new tax code, personal exemptions are eliminated for 2018.

Many health plans allow dependent coverage if the child qualifies as a dependent under a dependent exemption under the parent's tax return.  If the parents can no longer claim personal exemptions, can the Health Plan retain the same test for coverage of dependents? 

I think the IRC will retain the dependency tests even though there is no longer a dependent's exemption.  It may be relevant for credits such as Hope and tuition.

I want to check my sanity.  I am taking over an ESOP and I think the prior TPA didn't handle vesting for rehires correctly via the Rule of Parity.  I know of no exception to that rule.  If the person had any vested amounts prior to termination upon being rehired they get all their Years of Service for Vesting is my understanding.  This is regardless of the number of BIS. 

For example:

There is a person they are telling me had 8 YOS when they terminated.  As such he was 100% vested with that money.  His money is still in the ESOP even.  The person was rehired well after 5 BIS.  They show him as having earned 3 YOS since they were rehired and thus 40% vested on the new money. 

Am I missing something or is that a clear violation of the Rule of Parity? 

What is the definition of start date for eligibility in the 401k? Is it first day worked? First day paid?

I have client that uses a sign-on bonus and pays it at signing. Does this begin the count-down for eligibility? Or can they still use first day worked?

And the reverse: what is the definition of a termination date? Last day worked or last day paid? A participant who terminates on 12/28/2017, but his last paycheck in in January 2018. What is his termination date? Is he eligible for 2017 contributions with a last-day requirement?

Plan amended as of 07/01/2017 to exclude per diem employees.  Plan is top heavy.  Must per diems who were participants until 07/01 receive a top heavy contribution for 2017? 

Hi,

Form 5500 is done on a cash basis. Profit share contribution isn't done until after year -end. Can client still claim the profit share deduction on his 2017 corporate return even though the Form 5500 won't show it until 2018?

Regs say 1,000 limit is ok but what about 5,000 limit. plan has few if any HCE's.  does this fail the rights benefits features test or the reasonably  equivalent basis test?