I got married recently on the 25th of February, 2017.

My wife has a non-limited FSA with her employer. I have an HSA/HDHP with my employer. I'm looking to move her over to my employer's health plan.

Her employer is willing to retroactively cancel her health insurance and FSA on the 28th of February.

I can enroll her on my company's plan which is effective immediately. She wouldn't have any overlap in FSA/HSA contributions. Would this be fine?

Also, if we went forward with this plan would we be constrained in terms of our HSA contributions?

Can I exclude all HCEs from receiving Safe Harbor Nonelective if the current plan document doesn't have any specific language to do so (below is the language from the plan document and the spd)?

I moved this question as a follow-up question

For those that like to run projections of the net after-tax advantage of pre-tax retirement plan savings you might consider this possible scenario:

Maximum Federal rate on wage, pension & other regular income 33%

Maximum tax rate on business income from flow-thru entities not paid to owner(s) as wages 25%

Exclusion from tax of 50% of interest, dividends & capital gains (making max tax on investment income 16.5%)

So the self-employed doctor has the following choice:

1. Keep $50,000 of business income, pay tax at 25%, reinvest after tax at 16.5% tax rate on earnings

2. Put $50,000 into a PS plan (assume doctor is only participant), save current tax at 33% but ultimately pay tax on all distributions at 33%

Some commentators say the results shift to favor option 1 even when you disregard the possibility of having to make contributions for eligible employees and pay plan administrative costs.

Of course such a scenario would also need to consider making the $50,000 contribution as ROTH (immediate conversion of employer contributions to ROTH) which may result in ROTH becoming the game of choice for professional practices.

It seems to be about three years since this topic has come up, so I was just wondering what everyone's current opinion is regarding making the deposit of employer contributions timely.

Obviously, we'd prefer if the money was actually deposited into the Trust by the deadline date.  But we all have clients who, for one reason or another, aren't ready to make the deposit until the day before the deadline and still have to mail a check somewhere.  What's the best current guidance we can give those poor souls?

From searching previous threads here, I've found:

1. There’s a footnote to the 1996 DOL deposit regulations (the regulations that relate to the definition of “Plan Assets”) that gives an example of an employer mailing a check to the plan counting as the money being segregated as of the day the check is mailed (provided that the check clears).  This example relates to employee deferrals and doesn’t mention employer contributions.
2. IRC 7502 gives general guidelines about using the postmark date, but it explicitly says that this section does not apply if you’re making the deposit to “any court other than the Tax Court”.
3. There are apparently several Private Letter Rulings that use the mailing date as the deposit date for their various scenarios.  There is at least one instance, however, where the postmark date was rejected because the employer couldn’t prove what was in the envelope they postmarked.

Some of these threads are over a decade old, so I'm hoping that someone has gotten a clearer answer by now.  Thanks.

We have a plan that started in 2016.  The first year is a short plan year - 12/1/2016 - 12/31/2016.

It is my understanding that both compensation and 415 limits must be prorated to 1/12 or compensation limit is  $22083.33 and the max the HCE can put in is $4416.67 (which encompasses both deferrals and any employer contributions).   he is not age 50, so no catch up.   They want to put $30000 into the plan between the owner and his spouse.   He makes over 265,000 and she makes 45000.  I don't see any way to do that for 2016.   The most I  figure is around 8833. 

Just want some feedback and any guidance on what I may be missing here.  Thanks

Yesterdays e-News for Tax Pros included a webinar with 1 free CE Credit for those of us who need it.  

Working with the IRS Office of Appeals – What to Expect

CPE Credits 
 
You may earn 1 CE Credit for Federal Tax.

To receive a certificate of completion (if applicable to this show), you must:

• View the presentation for at least 50 minutes from the start of the program for one CE credit.

• View the presentation while signed in using the same email address that you used to register (you will not receive credit by watching on someone else’s computer).

• PTIN Holders : In order to get your CE credit reported to the IRS, ensure that your first name, last name and PTIN match your account. Your PTIN begins with the letter P followed by 8 numeric characters.

• If you don’t have a PTIN or your name and/or PTIN are entered incorrectly, you may receive a certificate; however, your credit will not be reported to the IRS. Other tax professionals will be sent a certificate and may receive credit if the broadcast meets their organizations' or states' CPE requirements.

• Only registrants who watch the live presentation may qualify for the certificate of completion and CE credit. You will receive your certificate of completion via e-mail about one week after the broadcast.

Client X is a 501(c)(3) organization that maintains a 403(b) plan for the benefit of its employees.  Up to now, the plan merely provided for a discretionary nonelective employer contribution.  X wants to amend the Plan to allow employees to make elective deferrals and receive matching contributions with respect to the deferrals.  A copy of the plan document has been requested from X.  In the meantime, the Summary Plan Description already provides for elective deferrals and the SPD is given out to the participants.  Assuming that the plan document does not provide elective deferrals, is there an operational violation because the SPD provides for elective deferrals, even though none have been made and even though all employees have been told that there are no deferrals under the plan?

We don't do these, so I'm not familiar with document details. But it seems to me like a "regular" 401(k) or PS document could be used for a ROBS plan, as long as the document allows essentially unlimited portion of the assets to be invested in the employer (must be a c-corp) stock.

Is that true, or is a special document necessary?

I know these have become more popular in recent years. Years ago, the IRS REALLY didn't like them, but it seems like for plans with no NHC, and a stock that is properly valued by an independent appraisal each year, that FILES 5500 FORMS, that they have dropped some of their previous objections. Anyone work with these?

https://www.irs.gov/retirement-plans/employee-plans-compliance-unit-epcu-completed-projects-project-with-summary-reports-rollovers-as-business-start-ups-robs

Need suggestions on how to distribute refund from a terminated self-insured group health plan (premiums were paid pre-tax by employees only, no employer contributions).  Sponsor terminated the plan in 2015 and recently received substantial refund. The new plan is an insured plan.  Sponsor is a temp agency with high turnover.  In 2015, participants in the self-insured plan were 200-$300 but every month they had 40-50 participant turnover.  Based on the number of participants the refund would be around $300/participant. 

Should they try to locate former participants based on a cost analysis?  Participants in the new insured plan includes management employees who were not eligible to participate in the self-insured group health plan.

Thanks

Hi all,

Hopefully someone can help, I've searched and not much has come up on the subject.

We have a plan that consists of 4 groups. (A,B,C,D) Group A would do administration and training for the other 3 groups. Recently, ownership and roles have changed and it made more sense to convert the plan to an open MEP. Group A still handing the work regarding the plan and letting the other groups adopt provisions within the plan.

In past years and from 1/1/2016 to 6/30/2016 it was all in 1 plan, 1 5500. Filing with Group A's data. From 7/1/2016 to 12/31/2016 (and beyond) it is going to be treated as an open MEP. 4 5500's going forward.

My question relates to the 5500 filing for this conversion year. It would seem two scenarios are at play, and I'm having trouble finding guidance:

Scenario 1 - A 5500 filed for 1/1/2016 to 6/30/2016 showing a transfer out of all the assets. This would be due 4/15/2017 with extension. Then 4 5500's for the 4 groups 7/1/2016 to 12/31/2016 with assets transferred in.

Scenario 2 - Since Group A will exist throughout the whole process. Group A files a 5500 from 1/1/2016 - 12/31/2016 - showing a transfer out of the other 3's assets. Then the other 3 groups file their 5500's from 7/1/2016 to 12/31/2016.

We are leaning towards Scenario 2 but unsure. Thank you in advance!

Has anyone ever seen an analysis done for just how detriminental ADP refunds are to an HCE's savings IF the refunds are invested after tax in a regular brokerage account?  I wonder if there is even analysis that suggests if you pay all the withholding out of other assets and invest the proceeds.

I'm asking because I have been lately telling people that if you invest the refund instead of spending it, you are probably not so terribly worse off. Would love to have some economic analysis to back me up on this.

I am of course not suggesting that investing after-tax is better, only that the disadvantage is not drastic (but who knows, maybe it is?).  Would love to see the numbers!

generally when we create a wraparound plan doc merging H&W benefits that filed their 5500's separately, we file the original plans for the full year as a Final with zero participants in the same year the new plan starts.

example:

501, 502, 503 - 12/31/16 filed with count of 150 each

510 - new plan effective 1/1/17.

501, 502, 503 - 12/31/17 filed as final with zero count

510 - 12/31/17 includes all Sched A's

is this generally what's done?

corollary question: one of the plans being merged is a 6/30 plan. It is now March and we know the next filing will be a final with zero count. Can we file that 5500 (6/30/16) prior to the period actually ending?

I have a client with DB & DC (3% SH 401k) Plans that are aggregated for coverage and non-discrimination testing.

If I have 2 years for eligibility for the DB and PS Parts, an employee who is 401k & SH eligible gets a 3% of pay SH contribution that also covers TH 3%.

Is that employee raised to the minimum Gateway?

I hope that is enough information to respond if someone has time.  I would have thought this would be discussed but cannot find anything via the Search.

Thank you

If a participant goes from a non-excluded class to an excluded class, is he still eligible for the contributions under the plan?  Specifically, the plan excludes employees who "normally work fewer than 20 hours per week", and a full-time employee is going to a part-time position that would be excluded.  Is he still eligible to receive benefits?  Or is he now in an excluded class and not eligible for the plan?

A plan needs 11g to pass testing (401a26, 401a4, whatever). The regulation clearly states that providing additional accruals to terminated nonvested participants through 11g is not permitted. But you can do this if you vest those terminated nonvested participants as part of the 11g amendment. Is giving them 20% vesting OK? Less OK? Whatever vesting percentage is given, must it apply to the entire accrued benefit or just the additional accrual being granted under the amendment? Is there anything that specifically addresses this?

Can a non-profit have a non-qualified plan other than a 457(f) or 457(b)?

So how do you deal with this? According to Sal, these guaranteed payments, under some circumstances, ARE taken into account in computing net earnings from self-employment. Most calculations I've ever seen just use the K-1 Line 14 amount, minus 179, unreimbursed partnership expenses, oil & gas depletion.

Because these amounts are "taken into account" - does that mean the CPA has factored them in already, if applicable, when arriving at the Line 14 number?

These are often pretty large amounts.

Plan year runs from July 1, 2015 - June 30, 2016. Plan has a profit sharing allocation of 5% to all participants, no allocation conditions.

Participant earns $30,000 from July 1, 2015 - December 31, 2015. 

Participant earns $1,000 from January 1, 2016 - June 30, 2016. Participant terminated employment January 30, 2016.

Profit sharing allocation is $1,550 (5% of 31,000). Participant makes no deferrals. The profit sharing allocation is deposited in September 2016.

How does the 415 limit work in fiscal plan years? TPA is processing a 415 failure of $550 and I am trying to understand how this works in conjunction with a pro-rata profit sharing formula.

Thank you

Our plan documents have the last day of the plan year written in.

We have a plan that ends Feb 28.

What do we do in leap years?  The doc says Feb. 28, not "last day of February."

Do the regs address this?

Where can I find a write-up on when a SH contribution is missed, when are we required to do the ADP test?  Is it in the EOB?

I have a plan where, for whatever reason, the ER did not deposit a SH for two people.  They did it for the other dozen or so participants.  Do I have to do an ADP test for 2014 and 2015?  And still have the ER make the SH contribution.

What if it was for an entire population for a year?  What if it's just a true-up that was missed for the plan/a few participants?

I don't think I've ever sat down and read an clear, concise procedure for