I have a plan who uses their accountant to do all payroll functions, including the 401k deposits. In 2014, he reduced a participant's deferral amount so he wouldn't go over the limit. In 2015, he forgot to raise it. In 2016, the participant noticed that he had only deferred $2,400 in 2015 instead of $18,000. The participant never checked his paystub, his investment house statements, or his bank account. Is this a situation where the participant is owed a QNEC? The argument could be made it was on him to notice that the deferrals were never raised.The accountant never notified the participant he was going to do this in the first place. It also affected his Safe Harbor match amount, of course.

Thanks in advance!

We have mostly plans on platforms where distributions and withholding are taken care of for the client. However, I have one client who is with a broker, who does none of that for him. He recently had a terminated participant request a cash distribution. I instructed them to withhold the 20% - now he is asking me what he does with it.

Am I correct in telling him to go to a bank, get a deposit coupon and mark 945 on the coupon and make the deposit (much like a 941 deposit).

Thanks for input.

If the due date for a Summary Annual Report falls on a weekend does the due date bump to Monday after the due date? Not having much luck finding an answer on this. Thanks.

I have a terminated calendar plan with the final short plan year ending October 31, 2016 and the plan needs an audit report. The Accountant who will perform the audit has asked that I file an extension to give him until August 15, 2017.

My question is...can I file a 5558 now? Will it create a "flag" in the IRS system because the plan year end would normally be 12/31/2016?

There is a place on the 5558 to mark if it is for the first return filing, but I'm seeing nothing if it is for the final filing.

thanks in advance!

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Q. How many people work at your company.

A. About half.

I've talked to a particular client so much about their automatic enrollment errors that I'm not sure which way is up any more. Eligibility is age 18 with 1 month of service. Plan entry is immediately upon completion of the eligibility requirements.

The client's payroll service is telling them that means the first pay period that ends after one month of employment. (example, DOH 9/10, pay period end 10/22, first eligible paycheck date 10/28)

I always understood it was the first paycheck that occurs after one month of employment. (example, DOH 9/10, pay period end 10/8, first eligible paycheck date 10/14)

Is there some flexibility in which way it is calculated so long as they are consistent?Is there a reference that I can provide to settle it?

Under 404(o), the cushion can include increases in FT due to expected increases in comp. If a first-year DB owner-only plan sponsor tells me that his 2016 compensation will be 100,000 but is certain that he/she will earn more in 2017 and later years, is it unreasonable to assume a higher comp limit and thus value a benefit greater than 10,000/yr comp limit for the tax max cushion? Say he's age 45 and NRA is 62. I'm thinking a reasonable approach is to assume 3% salary scale and use 100,000 * 1.03^17 / 10 / 12 =~ 1650 benefit adding 650 to the cushion benefit. Of course, warn the sponsor of the risk of overfunding. What if he's age 62 and starting a DB...how aggressive can we be with the sponsor's assurance of higher comp? Is there any other discussion or guidance I can lean on here?

I have an employer who insists on maintaining a one year wait for eligibility in his plan, but in order to attract an incredible salesman who wants to defer, he would like to waive the requirement for him .... saying it would be a one time exception. Does anyone have a good list of reasons not to do this (other than water cooler talk)? He wants to just let him in to defer and not receive the employer contributions until he is otherwise eligible.

Thanks.

I happened to find the following item that I posted in a "Humor" conversation back in 2014. How could I have foreseen the horror that awaited (actually, since the Red Sox choked in the playoffs this year, I'm glad the long-suffering Cubbies won).

But just wait 'till next year!!!

"What's a Cubs fan? I thought the last big asteroid strike made them extinct."

Currently we have a PPO H&W Plan with fairly generous H&W benefits. We are thinking about offering a new consumer directed high deductible health plan with an HSA but just for new hires.

Does anyone see any issues with this?

Thanks

Lexy

Hello all,

I am hoping you can settle a disagreement I am having with a few people inside my office. We have a client that is a Safe Harbor 3% for 2016, and has distributed the SH Notice for the 2017 plan year (they did so by November 30, 2016).

However, now the client would like to change to a Safe Harbor Match for 2017. Can the plan be amended for 2017 now, even though the 2017 safe harbor notice has been distributed?

Part 2 to that question, suppose a notice had NOT been distributed for 2017. Aside from an operational failure, does that change the answer above?

Thanks

An employer has a large amount of heath FSA forfeitures on its books. Can it use these forfeitures to pay for TPA expenses for the health FSA that were incurred in years prior to the year in which the forfeiture relates. For instance, can it use 2016 forfeitures to pay (in effect, reimbursing itself) for administrative expenses incurred in, for example 2010?

I am attempting to make an initial determination to ASG for a clinic where we have taken over on the TPA administration. I learned there are 10 individual Drs. practices with separate 401(k) Plans and each of the 10 individual Drs. practices also own a percentage of the clinic. The clinic has employees and also has a 401(k) Plan. Each of the 10 individual Drs. practices uses the clinic for any procedure they do and a significant amount of the revenue is paid to them from services provided to third parties in the clinic. An analysis have never been done nor been raised in the past. They are going to likely turn over to a law firm for analysis, but want an initial opinion from the TPA.

It seems to me to be a pretty straight forward FSO and A-Org situation. However, in reviewing the 1983 proposed regulations and other guidance, I am reading that the FSO needs to be established as a Professional Service Corporation. I am not sure that any of the 11 are set-up as a PSC. Does this get me out of the rules if all are set-up as non-PSC corporations? If set-up as a partnership or something other than a corporation, then it does fall under the FSO rules?

Thank you for your time.

Four doctors own Surgery Center A. Each personally owns 25%. They are paid through their S-Corps.

The same four doctors and another doctor each own 20% of Surgery Center B. Each will be paid by through their S-corps.

I am thinking there is an ASG with the four S-Corps and Center A.

A controlled group with Center A and Center B.

And an ASG with five S-Corps and Center B.

There is only one plan, sponsored by Center A.

Center B is going to adopt the Center A plan.

Am I correct in assuming that the fifth doctor owner of Center B's S-Corp can adopt the Center A plan as well, and further, because it is part of this overlapping group, the S-Corp could not adopt it's own plan without taking into consideration the other members of the related group?

Thanks.

If a plan document states employees can contribute up to 100% of salary and doesn't specify capping HCE's, but HR typically limits HCE contributions to 8% each year due to testing issues, are there any formal notification requirements for this limit? For example, does a notice need to be sent 30 days before plan year end, etc? I can't find any info on this but it seems like notification would be fair in order to allow HCEs to plan accordingly.

I am taking over a Plan who allows everyone to contribute to the 401(k)/Safe Harbor portion of the Plan. However it is only the salaried employees eligible for the Profit Sharing portion (it's about 50/50 as to salaried and hourly employees). Am I wrong to think that the Profit Sharing portion also needs to simply pass the 70% test on it's own?

Thanks for your help in advance! I just want to be sure.

DB participant reaches age 70 1/2 in 2016.

DB plan is terminating and making lump sum distribution 3/1/2017which participant intends to roll to IRA..

TPA firm is saying no 2016 RMD required since plan termination distribution occurs before required beginning date of 4/1/2017.

Which means there will be no RMD with respect to this $$ for 2017 either since $$ not in IRA on 1/1/2017.

Doesn't seem right so requesting thoughts of others more familiar with DB RMD rules.

Thanks

It has been awhile since we calculated an RMD if the participant wants to take two distributions in one year.

As far as I can remember

DC

12/3115 account value used for both 2016 and April 2017 divided by life expectancy uniform table for age in 2016.

The second distribution has to be taken by 12/31/2016 and is based on the 12/31/2015 account value less the amount of the first distribution using the factor for the participant's age in 2016.

DB

Can't use the account balance method after 2005.

Actuary has advised accrued benefit as of end of prior year x 12, but that seems too simplistic.

How do you calculate if two distributions in one year?

Partners will be receiving bonuses in January 2017, attributable to 2016 settlements.

Can the Partners:

1. Assuming an election is made in advance of the settlement payment, defer for 2016 from the 2017 settlement payments?

2. Have 2016 Profit Sharing allocated based upon the settlement payment?