I represent an employer that contributes to a multiemployer pension fund.  The fund wants to utilize Revenue Procedure 2010-52 and submit an application to the IRS for a 10-year amortization extension.  In connection with that application, the fund is asking my client to send directly to the IRS certain financial information about the employer.  My client is concerned about maintaining confidentiality of its financial information (it is closely held) and wonders whether it should decline to provide the information so that the fund enters critical status where the trustees have some better options for addressing the funding shortfall.  Does anyone have any thoughts on this?  Thanks.  . 

We are using the prior year testing method.  We have an employee that was a NHCE in 2015.  He became and owner in 2016, thus an HCE.  For purposes of the ADP test, are his deferrals included in both groups? i.e. his 2015 deferrals as part of the NHCE group and his 2016 deferrals as part of the HCE group?

Thanks.

Imagine a 501(c)(3) charitable organization asks for your advice about whether it should establish its retirement plan as a 403(b) plan or a 401(k) plan.

Here are some hypothetical facts about this charity:

It has about 43 employees, all in one place.

There is no highly-compensated employee, and the charity anticipates there never will be one.

The highest-paid employee has gross compensation below $100,000.  The charity intends to keep her compensation below this mark that calls for reporting details in Form 990.

The plan would allow voluntary salary-reduction contributions, and might provide some matching contributions.

The charity's governing body believes none of the employees desires any investment beyond mutual fund shares.

For this situation, would you suggest a 403(b) plan or a 401(k) plan?  Why?

Which factors - whether about the different Internal Revenue Code provisions, or about differences in investments and services available - should a smart decision-maker consider?

There is a controlled group with 5 plans in it.

Plan A and Plan B need to be permissively aggregated in order to pass 410b coverage testing.

As a result, when performing the ADP/ACP test, we combined Plan A and Plan B.

Plan A and Plan B have different matching formulas and as a result we need to perform a BRF Test.

When performing BRF Test, is the denominator based on the entire controlled group or just the combined Plan A and Plan B?

Distribution department incorrectly processes a rollover as a lump sum. Participant has balance of $8,000. $5,000 went to the rollover company and is being coded as a G on the form 1099. The remaining $3,000 was sent to the IRS as tax withholding. Participant received zero dollars. That 1099 is being coded as a 1.

What options does the participant have regarding the $3,000 tax withholding? Can they contact the IRS to explain the situation? Or is their only option to file their taxes and receive most of the $3,000 back as a refund? I am assuming that with the latter route the participant would need reimbursed the 10% penalty (any way to avoid that?) and any part of the $3,000 she doesn't get back.

How many years do records of membership in a HDHP plan be retained (for purpose of proving HSA eligibility in a given year)?

For final payroll of the year, owner increased 401(k) and maximized catchup capabilities - deposit was made.

Payroll company would not in turn honor that deposit because the plan sponsor was not configured in their system to allow for catchup. They proceeded with they payroll they wanted.

We are at a stalemate. Payroll company telling owner to withdraw that amount but we are saying no.

Think it would be fine to submit to tax preparer actual contributions which do not match the W-2?

(not looking for commentaries on payroll companies, just trying to describe situation)

I have ~$35k in a state pension system that I am going to roll into a 401k in the next week or so (I have left state service, will not be returning, and don't qualify for a pension).    

I have an opportunity to get into another investment opportunity that will require as much of this $35k as possible (real estate related). 

My current plan is to take the largest loan possible (likely 50%) then taking an early-withdrawal of the remaining balance.  Is this possible and is this legal?  How low can I run the account down to with an open loan? 

There are lots of topics on this forum about employers not depositing deferrals for unrelated employees (sad!).  This is a little different - all non-owner employee deferrals and matches were deposited timely.  The deferrals for the 1 shareholder-employee were not deposited.  There are 2 years worth of deferrals and match not paid in.  If this were a non-owner employee there's only 1 option to fix this ... deposit what is owed plus missed earnings.  

The company does not have the cash flow to deposit the late deferrals and match.  This is the 100% shareholder.  Is there an option to not deposit the deferrals and match in some way...  amend W-2s and tax returns to change these deferrals to shareholder loan repayments?   Any creative ideas that would simplify the process?

No other employees have participated in this plan in 2 years.  

I appreciate your help!

An employer has a 403(b) plan and an employer contribution plan.  A former employee and participant has been rehired.  This employee has relocated and now lives in Ontario, Canada.  She has dual citizenship, but lives and works from her home in Canada.  She is the only Canadian employee.  The plans defined compensation as W-2 compensation, but there is no non-resident alien exclusion.  She does not receive a W-2.

Am I correct in thinking that

1)  She cannot defer in the 403(b) plan or receive a contribution in the employer contribution plan as she has no W-2 compensation

2)  She should be included in participant counts as an active participant, testing, etc.

3) They could increase her compensation so that she could contribute to the Canadian RRSP.

Thanks for any replies.

I have a life insurance salesman who has a significant part of his revenue paid to him as a statutory employee and is covered by the insurance company's retirement plans.  Additionally he has other commissioned income that is not considered statutory income by the payers.

In addition he has his own employee that he pays W-2 compensation.

He wants to establish a separate retirement plan covering his non statutory income and the employees income.

I have not been able to find anything definitive.  Would seem for retirement plan purposes he could establish a Plan for his non statutory income and that of his employee.

Any thoughts greatly appreciated.

Hi.  What information must be disclosed to a COBRA participant regarding calculation of premium?  We have a participant that wants detailed information about what makes up the premium.  He is asking for information about what costs/fees/etc. go into the premium calculation.  Typically we have explained that the COBRA premium is based off of the health plan premium for the coverage selected.  It is 100% of that amount plus a 2% admin fee.  He wants to know what goes into the health plan premium.  My thought is that the insurer has set the premium amount; and he or any participant can elect to coverage and pay that amount, or decline coverage.  But he wants very detailed information about what does into the premium amount.  What are we (the employer) legally required to provide?

Thanks.

Top heavy minimum contributions were required for 2015, but they were not made until December 2016.  Are lost earnings required in this case.  If so what is the loss date?  I can' find anything that specifically spells this out.

Thanks for any guidance.

Just saw the attached, in an internet post by and Edward Morrow. Also saw a similar post by someone else. Not being au fait with community property IRA beneficiary rules, I found this rather surprising from a "common sense" point of view. Haven't seen an actual copy of the PLR.

Fixing Plans with Community Property IRAs

The IRS takes the position that a court order granting a surviving spouse 50% of an IRA that was her community property pursuant to state law is ineligible for a rollover!  This is a wake up call to watch out for any cases where spouses are not named on the beneficiary designation form for community property IRAs.

Community Property IRA Disaster

In PLR 2016-23001, Decedent left 100% of his community property IRA to his son, not his wife.  In settling estate, court ordered a portion (the ruling did not say, but probably 50%) of IRA to wife.  She asked the IRS to rule that it was not a taxable event.  DENIED.  IRS held it would be taxable to son because Section 408(g) provides that § 408 “shall be applied without regard to any community property laws.” She could not be a payee and could not rollover the IRA.  Three lessons: 1) Had son simply filed a qualified disclaimer, it would have likely passed to wife via intestacy (if not via contingent beneficiary designation) and spouse would have been entitled to rollover; 2) Check the beneficiary designation form and plan ahead for how spouse will receive community property - naming spouse as 50% beneficiary or more would have avoided the need for either a qualified disclaimer or an expensive private letter ruling; 3) Prevention is cheaper than PLRs!

Does anyone know of guidance that says the rule that requires pre-break service to count for post-break vesting if the participant has pre-break 401(k) elective deferrals also applies to 403(b) elective deferrals?

I have a plan that is performing its ADP testing by excluding the otherwise excludable employees. I know that the 410(b) testing has to be performed the same.  However, if the plan is cross-tested under 401(a)(4) for the employer contributions, does this testing have to follow suit?  Or does the 401(a)(4) testing stand on its own?

This is ridiculous.  I am reading that employee deferrals under a 125 plan are supposed to be excluded from the definition of compensation.  So Johnny makes $100,000 and his insurance premiums are $5,000 so his eligible comp is just $95,000.  Is anyone in the country doing THAT right??

I'm renaming these things to "COMPLEX's"  I don't know what it stands for yet...

Basic deferred comp plan permits participants to defer up to 85% of income.  Most don't defer that high or if they do don't have a problem with other deductions.  One participant however, has significant deductions for other benefits including basically every welfare plan offered such that FICA taxes and other deductions from pay before the deferred comp deferral total just over 16%.  In short, he cannot defer the requested 85% and cover taxes and benefit plan deductions.  The plan, for better or worse, does not expressly address conflicts with other deferral elections (not sure if it would help even if it did).  What to do here?  Seems inappropriate to disregard or invalidate the entire deferral election.  Are they best to honor the deferral to the maximum extent possible?  If so, is it fair to assume that all other deferral elections (health insurance, flex plan, deferrals) should take precedence and just put the remainder into the deferred comp plan even though not at the full election level?

I've never come across this one before and could use some guidance.  I have an owner who died in 2011.  Spouse decided to keep the money in the plan and re-name it as her own; so the money was never "distributed" formally.  Fast forward, spouse is now an owner/HCE/key.  Question I have is, does the deceased spouse's account balance, now under living spouse, and current key's account, count towards top heavy?

I'm 99% sure it counts, but can't point to an exact provision as to why.  I read through all of the regs on this I could find and nothing jumped out to me as on point.  I'm curious if it's a related rollover and would count as being rolled over/transferred to a plan maintained by the same employer....even though it's the same plan.  I did a search on here but couldn't find anything conclusive (hoping it's not an un-resolved gray area).

Any help is appreciated; thanks in advance!

I'm trying to search for the official IRS guidance that provides that assets must be distributed within 12 months when a plan is terminated. On the IRS website, it provides it has to be distributed as soon as administratively feasible (generally within one year), but  I need the actual Rev proc/official guidance. Any suggestions?

Thanks.