I have an employee that elected Dependent Care FSA for 2017, has had amounts withheld and has processed claims with our provider but just realized that as part of his divorce decree he and his ex switch year to year who covers and claims their child so he is not eligible for the DC FSA. 

How do we go about refunding him for the amounts withheld and him repaying the amounts he was reimbursed for invalid claims?

A 457(b) plan requires all employees to make a mandatory contribution of 7.5% of compensation. The employer didn't take the mandatory contribution from a new hire's pay beginning 6/2016. The plan document does have language that the employer can make corrective contributions to the plan.

Since employer contributions are added together with employee contributions towards the 457(b) limit, would this also apply to a corrective employer contribution?  

Plan is prior year tested.  Last year, no NCHE contribs, no HCE.  2016 1 HCE and some NHCEs.

HCE is over 50, deferred $2,500.  ADP test fails, but no refund, re-characterized as catch-up.

He received a $600 match.  ACP test obviously fails.

BUT:  do I forfeit the match b/c the ADP test failed and all the match is attributable to deferrals anathema to the ADP test?  Or, do I refund the money, as the ACP test fails?

Is anyone making the shift to self-certification?  Has anyone spoken with auditors about this (I mean CPA auditors)?

http://benefitsbryancave.com/irs-views-on-self-certification-of-financial-hardship/

When calculating the covered comp for the 25% deductibility, do you use pay as a participant or full year pay for mid-year entrants and when benefits are calculated on partial year pay?

For example, participant paid $50,000 in 2016, but entered the plan on 7/1 and made $25,000 thereafter.  PS is 5% of $25,000.  Am I using $50k or $25k when calculating the max deductible tot he ER?

Plan uses Safe Harbor Nonelective 3% but excludes Key Employees and HCE's.  For 2016, the plan is Top Heavy but there are no NCE's covered under this plan only HCE's and Key Employees.  Does the Top Heavy minimum have to be given?

Caesar didn't get his done on time and look what happened to him.

So beware the Ides of March!

the CPI factor was released today for Feb = 243.603

so if it stays at that level for the next 7 months, the deferral limit moves to 18,500

the other limits will jump if the avg for Jul  Aug  Sep = 244.5 (rounded)

with the Feds expected to raise interest rates, with 7 months to go of CPI factors, I'm guessing there will be an increase in all limits next year. of course it is still early....

A plan participant was only age 57 and was not eligible for early retirement benefits based on the plan provisions in effect before the plan amendment (see below data).

Based on the answer key from SOA- the answer is C

Why do we have then compare the age 57 monthly accrued benefits when the participant retire at age 60, i.e., after the early retirement benefit amended?

Is this because of the  §411(d)(6)(A) accrued benefits or §411(d)(6)(B)(i) early retirement benefits and retirement type subsidies?

If it is because of (6)(A), I kind of understand that you cannot take away already accrued benefit.

But if it is because of (6)(B), can someone explain me why.

Provided

Benefit formula: 1.5% of final compensation per year of service.
Early retirement date: Age 60 with 10 years of service.
Early retirement formula:
        Before 1/1/2007: Accrued benefit, unreduced
        After plan amendment effective 1/1/2007:  Accrued benefit reduced 4% for each year the benefit
commences before normal retirement date
Data for participant Smith:
      Date of birth 1/1/1949
      Date of hire 1/1/1980
      Date of retirement 1/1/2009
     Monthly accrued benefit as of 12/31/2006 $1,650
     Annual compensation each year from 2007 to date of retirement $50,000

Question 30
In what range is the monthly benefit payable to Smith on his date of retirement?
(A) Less than $1,400
(B) $1,400 but less than $1,550
(C) $1,550 but less than $1,700
(D) $1,700 but less than $1,850
(E) $1,850 or more

401k Plan uses W-2 Comp. Numbers below are made up for example.

Company surprised its staff @ annual holiday party with $400 ipads. On 1/3 of next calendar year they processed corrective payroll for the value, including tax ($424). They also included 401k. So an ee with a 10% rate had $42.40 in 401k put in.

Something sounds fishy to me. Should the payroll have shown 424/.9=471.11 since 471.11-47.11=424? I'm seeing circles and wondering if the 401k was calculated correctly, let alone the right dollar amount used for W-2.

Hello,

I am looking for a little guidance (I believe the answer will be VCP, but wanted to be sure that nobody has a different idea).

We took over a plan, and 2016 is the first year we are doing the administration. Several participants made Roth Deferrals, but the PPA Restatement effective 1/1/2016 does not allow Roth contributions. Upon further questioning, there have been Roth Deferrals for years (the prior EGTRRA Restatement did not allow Roth contributions either).

The bulk of the Roth money is actually from the sole owner, but other participants have Roth money within the plan. The prior administrator kept track of all of these as regular pre-tax deferrals (they never requested or saw the W-2s).

Again, I think I know the answer, but can we self correct this in any way, or is VCP our only answer? Will they allow us to do a retroactive amendment to the plan to allow for Roth contributions?

Thank you

1. I don't see this addressed anywhere in the proposed 457 regulations (or existing regulations or 83 regulations for that matter). There's a somewhat bright-line rule requiring two years of services to create a substantial risk of forfeiture under 457(f). However, there's no mention of how long a non-compete must last. I would imagine the IRS would disregard a very short non-compete, e.g., you retire on December 31, 2017, and have a non-compete that lasts until April 1, 2018, at which point you are paid. Is anyone aware of any guidance in the form of PLRs, conferences, private conversations, etc.? 

2. Under the proposed regulations, I don't see anything that would prohibit entering a non-compete for the first time upon termination and relying solely on the non-compete to create a substantial risk of forfeiture. For example (assuming you meet the new non-compete conditions for legitimate interests, enforceable agreement, efforts to enforce) an employee voluntarily terminates with no deferred comp plan in place. In connection with the termination, the employer offers a five-year non-compete with payments of $100,000 for each year that the employee complies with the non-compete. I don't see anything that requires substantial services before the non-compete to create a substantial risk of forfeiture for the payments during the non-compete period.

Thanks in advance!

well, at least one pizza place from time to time has buy one 'pi' get one free, so I guess I need to celebrate the day.

double dang it, it may be 3/14 but it is only 1:36 so I am posting a little early

Traditional db overfunded with eoy valuations terminates during 2016 and val date is moved to plan termination date. assume no cb or conts for simplicity. What would you call assets/(ft+nc)

as of the val date if you were doing a separate aftap certification?; 2017 aftap? plan termination aftap?

final aftap?..val date and thereafter aftap? 

What exactly is it that I can only do if I am in ERPA?  Can I do a VCP for a plan where I prepare the 5500?

There has been some discussion in my office about how individual contribution amounts should be limited under a cross tested plan PS allocation. 

The primary question - If the Profit Sharing Contribution in total does not exceed 25% of TOTAL eligible compensation - can an individual participant received more than 25% of their individual compensation?

I always thought no, but if I am wrong - I'd be ok with that!!..

I would appreciate feedback please.  Thanks!

Here are the (simplified) facts:

2 unrelated employers (unrelated till 12/31/15) sponsor a 401(k) PSP.  As of 1/1/16 they became a controlled group and are tested together.

Question:  When determining top heavy status as of the 12/31/15 determination date would I aggregate the employers for the top heavy test or not?  Cites appreciated.

Thank you!

PS:  the actual facts are more complex, it is an overlapping CG/ASG situation.

The document excludes fringe benefits from comp.  I think I remember that cash in lue of health insurance is counted as cash and included in Plan comp.  What do you all think?  Can anyone provide anything in writing?

I have a client who is just now realizing that the safe harbor match true-up provision they've had in their plan for almost a decade is "costing [them] money" by making them do more match than just what they calculate weekly (I suspect a new bookkeeper).  They want to do a mid-year amendment to remove the annual true-up of the safe harbor match effective ASAP.

I don't see where this neatly fits into one of the prohibited amendment boxes, so I'm thinking this might not actually be too bad.  It feels wrong, but maybe that's just me.  If this is OK, would you keep the true-up through a date 30-days in the future (maybe April 30)?

Thoughts?  Thanks.

Employer A is part of a controlled group consisting of one other larger company (company B), but has a great deal of autonomy from the CG.  They are permitted to take part in Company B's 401k plan.  However, The owner of Company A is an HCE in the Company B plan and keeps getting hit hard with 401k returned deferrals since Company A plan is not safe harbored.

Can company A start their own safe harbored 401k plan immediately or do they have to wait until the start of a new year to have a new plan effective?

Would anything need to be done in Company B plan to then exclude Company A employees from being eligible for Company B plan?  I do not think that having Company A employees eligible for both plans would be desirable, so I would assume of a Joinder Agreement allows Company A employees to be in the Company B Plan, it would just be a matter of changing that agreement?

Company A employees have money in Company B plan.  Once Company A has their own plan, can Company A employees move their money out of Company B plan?  Would that be via distribution or transfer?  Since no one is terminating employment, I would think a transfer out of B plan to A plan would be the only option.

Both plans would have to be tested together correct?  The contributions in A plan might be better than B plan, but if B plan has more HCEs, there is a decent chance both plans pass 401(a)(4), would you agree?

Thanks