I have a client that owns life insurance . Client owns an S corp and he is 100% shareholder. He wants to make the corporation and his children beneficiaries of the policy.
The corporation will be paying for the premiums - Question: Can the corporation deduct the premiums? and What is the tax consequences if the shareholder dies?

Thank you

I have a plan with automatic enrollment notice - it only effects the newly 1/1/17 eligible employees. No changes are made to current employees with an election on file. Does the plan still have to send the notice to everyone? Or just those newly eligible?

Profit Sharing Plan (no 401k feature) by its terms excludes the three shareholders/HCEs. There are other HCEs eligible. In performing basic rate group testing under the general 401(a)(4) test in the regulations, can you count the three excluded HCEs in the rate group analysis?

I understand that as long as the document allows, deferrals are part of DB compensation. Say a person makes 24,000 including catch-up in 401k deferrals and the DB annuity factor is 13. If the sole prop income after FICA is 51,200, then the person could have a DB benefit of 24,000 * 10% * 13 = 31,200, loosely, and deduct his entire net income.

Am I off base here on deferrals?

The IRS has issued proposed guidance on 417(e) issues.

Is it my imagination, or has the IRS rejected outright the conclusions of the 6th Circuit Court of Appeals that if a plan's pre-retirement death benefit calls for no forfeiture of benefits in the event of death before retirement (e.g., a cash balance plan paying the full account balance in the event of the death of the participant before benefit commencement) then no pre-retirement mortality discount is permissible under Section 411? The IRS seems to be saying that (a) Section 411 permits amending out death benefits other than the mandated QPSA and (b) accordingly, discounting for pre-retirement mortality is generally permissible since there is no requirement to value ancillary death benefits.

The IRS does assert, however, that benefits attributable to mandatory employee contributions cannot be discounted for pre-retirement mortality.

Are others seeing what I think I am seeing?

• Corporate DB client has established a high 3 year comp average over $265,000
• Has funded plan above value of benefits so having ongoing years of participation is key to use up overfunding
• Year 4 client wants to know if can take $0 compensation and put profit ($250,000) into plan

Question:

• If plan uses “elapsed time” for eligibility and benefit accruals (not hours) can the participant with $0 compensation still be credited with a year of participation for benefit accruals even though has $0 W-2 compensation..

Thank you for any thoughts.

So, suppose the following:

A 401(k) plan is selected for DOL review. They send the normal checklist requesting documents, etc., within 10 business days.

This, (naturally) happens to be a messy plan, not in terms of any malfeasance, but the sponsor had tremendous financial difficulties and is just now emerging from bankruptcy, although not yet formally approved.

5500's have not been filed for a couple of years, because they had absolutely no funds to pay for plan audits, etc. - plan sponsor was aware of the problems/risk, and was planning to file under DFVCP as soon as possible.

Here's the question, because I've had very little experience with bankruptcy situations. When the client submits the documents, which obviously will highlight the fact that 5500's have not been filed for 2 years, should they also submit any sort of explanatory statement, referencing the bankruptcy and including a copy of the bankruptcy filing? Or, do they just submit only the documents that were requested (practically everything) and wait for the next step?

My normal inclination would always be to submit it "up front" and get it all out in the open, but as I said, I have no experience in such a situation, and wondered if someone else did, and might have some pearls of wisdom?

Thanks!

Small 401(k) plan provides vesting credit to the profit sharing account based on years of service. Each year of service is a year in which an employee worked at least 1,000 hours.

For allocation purposes, there is no hours requirement.

The document indicates that a participant will be 100% vested upon the later of attaining age 65 or 5 years of participation. The document does not define a year of participation.

This plan has a participant who was 75 when she became eligible. She now terminated employment at age 83. She worked less than 500 hours in each of those years. Is she 0% vested or 100% vested in the profit sharing portion?

Thanks.

New employee (1st non-owner employee) will enter a DB Plan 7/1/2017.

Can I terminate 6/30/2017 and give only the owner a benefit for the year?

Thank you

I just wanted to take a moment and publicly thank everyone involved in this board from Dave and Lois to the people that are constantly providing answers and guidance.

Not sure how I would have survived in this business without this board.

Thanks and I hope everyone has a wonderful Thanksgiving!

WCP

Plan is subsequently (prior to 12/31/2016) AMENDED to remove the safe harbor provision for 2017.

I see no problem with this, but I've had several different people disagree with me. I don't see any legal obligation to continue the plan as a safe harbor plan for 2017 just because a safe harbor notice was distributed, as long as the plan is amended prior to the beginning of 2017.

Am I wrong on this?

I must be missing something, please let me know.

What would prevent an owner with 2 businesses from having a plan for each business, with identical plan provisions, both of them safe harbor matching plans. Then paying himself $225,000 from each company, contributing $9,000 in deferrals to each plan and getting a $9,000 SH match from each plan? It doesn't seem like he should be able to get more than $10,600 total match ($265,000 * 4%), but I don't know what is stopping him in this scenario. The plans could be combined for coverage and ADP testing and would pass. top heavy wouldn't be an issue if there are no additional employer contributions. So is this permissible? Obviously you could argue why go to all this trouble and expense of 2 plans just to get an extra $7,400 matching contribution... and maybe that is the answer (?)

As an employer, our employees are classified as Full-Time (35+ hrs per week,) Part-time (30-34hrs per week,) and per diem (less than 30/when we need them.) We charge our insurance premiums based on those classifications. The less hours you work, the more the employee share is. Due to ACA classifying everyone over 30 as full time, when calculating affordability would we need to calculate both the lowest share single coverage price for 30-34 and the lowest share single coverage price for 35+? Or is it just based on our lowest price no matter what hour category we put them in? It is the same MEC and MV plan.

Can an adult disabled child remain on their parent's health insurance past the age of 26? What documentation would be required? Disabled prior to age 22 (since birth).

We are looking for a good compensation survey that aligns with our administration process. Our administrators are responsible for the following. Please let me know if you have any suggestions on where to find an appropriate compensation survey. We are looking for good data not necessarily something inexpensive or free. Thanks in advance for your help.

• DC and DB testing (including combos), administration, 5500's
• Trust Accounting
• Sponsor/Producer Relationship
• Distribution Issues
• Knowledge of Life Insurance w/ in plans
• Plan Design Consulting

Can you define HCE based on current year compensation instead of look back year compensation in the plan document for compliance testing purposes?

I'm having a major brain freeze regarding this question, so here goes.

Company A merged into Company B on 10-1-2016. Company A sponsored a safe-harbor 401(k) plan (4% match), and the safe-harbor contribution had been made at each pay period. All employees of A "terminated" on 9-30-16 and began working for B on 10-1-16.

Company A remains in existence (to collect outstanding receivables, etc) and the owners of the company remain "employed" by A. The owners are asking if they could make a discretionary profit sharing contribution, over and above the safe-harbor match, on their behalf, omitting the rank and file employees who were all terminated on 9-30-16.

I have made myself nuts with the following questions:

Could they make this contribution only for themselves, as the contribution (benefit) would only benefit HCE's?

As the Safe-Harbor match satisfied the Top-Heavy requirement, would they need to provide the 3% TH to those who did not receive the match regardless of question #1?

Any responses, as always, are greatly appreciated!

Can anyone point me to a good source on structuring a disease management wellness type of program? My employer wants to create a diabetes management program for employees. I am wary of a structure that provides incentives to employees that participate, in that the only participants would be those that don't have diabetes. I know that other employers offer a diabetes management program, but I am not sure how they structure it to avoid discriminating against employees that can't participate because they don't have diabetes.

Thanks.

Has anyone seen a situation where employees' health insurance premiums are set as a percentage of the employee's wages on an ongoing basis - and wages can vary weekly resulting in a different premium cost every week (or month)?

I'm familiar with using a percent of pay at a given point in time to set a premium for the year, but not with using a percent on an ongoing basis with employees with variable pay.

I cannot find anything prohibiting this practice, although I can see lots of complications.

Any and all thoughts appreciated!

This is a new one for me. We have a plan that was effective 01/01/04. We have been TPA from the beginning. The sponsor provided us with their EIN; we used this EIN to obtain and EIN for the trust (SS-4), and have put this sponsor's EIN on every 5500 filing from 2004 through 2016.

Only yesterday did my contact advise me that this number is not theirs. She will check further and get back to me.

If we obtained the trust's EIN using the incorrect EIN for plan sponsor, and have filled 2004-2016 returns using incorrect EIN for plan sponsor, what do we do? Is this a big issue with IRS, or do we just change it on next 5500 filing with an explanation???