I had a client call and say they thought the company taxes were due 4/15 but were due and filed 3/15. CPA took the ER Profit Sharing contribution deduction but the client did not make the contribution until 3/22.Is there any correction needed in this situation where the deduction was taken and taxes filed prior to contributing the $ to the Plan?

3 HCE's (1 21 year old son of owner)

40 other EE's

1 Older HCE's want to get maximum The other just minimum gateway.

Son only 5% minimum gateway

Each EE in own group

Tested together fails Average Benefits Test

Can I restructure into two component Plans?

1. 2 HCEs and 30 NCHEs 30/40 / 2/3 = 113.6

2. 1 HCE younger and 10 NHCEs 10/40 / 1/3 = 75%

Or

1 1 HCE and 10 HCES - Average Benefits Test (Only HCE that wants to have max)

2. 2 HCEs and 20 NCHEs - Ratio Percentage Test

Test Group 2 - safe harbor allocation % as all get Minimum Gateway

Test Group 2 - Average Benefits Test

Am I missing anything? Other tests?

Can I just set them in two different divisions on software and test each division separately?

Thanks

I am having a debate with some tax colleagues regarding 409A compliance requirements for a SAR agreement.

There is a SAR agreement that doesn't exactly look like a SAR agreement. The payment is based upon the increase is stock value but the stock right is not "exercisable" - it matures and is payable only upon change in control, death or disability. Accelerated vesting upon CIC as well.

To me it looks more like a phantom stock plan that has to comply with 409A. [Also - if payment triggers are all 409A compliant - why not just make it compliant]

Others believe that because the amount to be paid is based entirely on the increase in the stock price that it is exempt under the SAR exemption. Note the company is a start up so FMV is going to be a good faith / reasonable written report.

Any inputs into the debate would be appreciated.

I have a calendar year 401k plan that filed Sched H in 2014 with 98 participants at EOY. On January 1, 2015 five more employees became eligible to participate. Do I need to file a Sched H for 2015 since my BOY participants is now 103, or are my BOY participants considered to be 98 allowing me to file as a Small Plan for 2015? I've researched but haven't been able to find a definitive answer on my BOY participant count. Thank you!

A 401(k) plan client without automatic enrollment has an employee who recently asked why the deferrals that he requested in 2014 were never implemented. Neither the employer nor the employee has a copy of an election form. Absent any evidence of an election being submitted, how would you handle a possible correction? The employer wants to do what's right, but doesn't wish to be taken advantage of!

A business owner owns 100% of the shares of each of four corporations. She assumes that the four corporations are one employer within the meaning of IRC section 414.

The owner wants three of the four corporations to establish and maintain separate retirement plans. (The fourth corporation employs only nonresident aliens, all of whom have no U.S.-source income.)

To meet nondiscrimination rules, each of the three plans will provide 401(k)/401(m) safe-harbor matching contributions.

Is there anything in the safe-harbor rules that precludes the section 414 employer from using several separate plans to meet the safe harbor (assuming all plans have sufficiently identical provisions, at least on points relevant to the safe harbor)?

A draft document was prepared for review/discussion last fall. This draft document contained a 3% default deferral. Upon final discussion, the client chose to use a 4% default deferral for automatic enrollment starting January 1, 2016.

The materials provided to the participants from the investment provider all explained how a 4% deferral would begin if no contrary election was made.

However, the plan document that was executed still had a 3% default deferral instead of 4%. It is a calendar year plan. The issue was just now noticed.

The question is: Does this necessitate a VCP application to properly fix, or is possible to adopt the 4% in an amendment now, retroactively effective January 1, 2016, as long as it is adopted before the last day of this plan year?

I am looking for an administrator/TPA to help me with my clients basic 401k plan needs. Is there a freelance/fee per client administrator who would be willing to help on these clients. Please message me or leave me your email and we can discuss more in detail.

Thanks

This is a weird situation. Controlled Group with two employers. Employer X has a non-safe harbor plan. For 2015 (calendar), there was one eligible HCE and about 50 eligible NHCEs. Easily passes 410(b). Employer Y, which is Employer's X's parent holding company that is essentially winding down out of existence, has a safe harbor match plan. One eligible HCE, zero eligible NHCEs. It doesn't pass coverage under any of the available tests. As I understand it permissive aggregation is not allowed because one plan is safe harbor and one is not.

Here's the catch. The one eligible employee - who was an HCE - did not contribute anything or receive any employer contribution. So, technically it flunks coverage because he was eligible, but is any corrective action required to avoid disqualification? In looking at the -11(g) rules, we can amend to make enough employees of the other controlled group member, Employer X, retroactively eligible for Employer Y's plan to satisfy 410(b), and then make QNECs for them. However, the QNECs for them only have to be equal to the ADP and ACP of the otherwise eligible NHCEs, but THERE WEREN'T ANY OTHERWISE ELIGIBLE NHCES!

I know that -11(g) says that the amendment must have substance, but when you read -11(g)(5) it only describes certain instances where there is no substance, and this isn't one of them.

Any thoughts? Am I missing forest through the trees?

basic db/dc combo..er has used cushion to advance fund db..now

would like to get out of the arrangement sooner than later..two questions.

1.)currently only lump sum ae is 417(e)..if plan is amended to use greater of 417(e) and some other rate(e.g. 3.5%)..how does one test for nondiscrimination...seems difficult to me...

2.)if the excess funding is transferred to 401(k) replacement plan and allocated over 7 years can this excess be used for any type er money(qnec,matching,prshar etc.)?

any thoughts are appreciated...

HAs anyone ever heard of an outlook plug in that will scan emails and attachments and warn you if it finds SS#'s?

We have a DB plan that has a 9/1 - 8/31/ plan year. Therefore, its 5500 filing date is 3/31 and, each year, we have filed a 5558 extending the deadline to 6/15. The plan terminated 8/31/2015 and, In late December 2015, the last participant was paid. Therefore, the final 5500 is for the short plan year 9/1/2015 - 12/31/2015. When I try to prepare a Form 5558 using our government forms software, I get an error stating that I can't extend the deadline to 6/15/2016, as this doesn't sync with a plan year end of 12/31/2015. Should I just override the software, as it doesn't recognize that the 6/15/2016 really is valid?

Any responses would be appreciated!

Under the most recent EPCR rules to correct missed deferrals how is it determined if a QNEC needs to be made if the period missed overlaps a year end. EX. participant elected to defer effective 10/1/15 and was missed and deferrals implemented 3/1/16. Is a QNEC required for 10/1/15-12/31/15 period and because of the brief 3 month exclusion no QNEC required for 1/1/16-3/1/16 period?

What does the "rolling 3-month period mean". Under the above circumstances does this mean a QNEC would be required for the entire period 10/1/15-3/1/16?

I am familiar with governmental plans using a PSP for matching employer contributions based on deferrals to a 457(b), however, this is my first time seeing it done with a MPP.

The money purchase plan has a fixed employer contribution 10% of earnings (no mandatory participant contributions) for the City Manager and ALL OTHER employees receive a variable employer match up to 5% of earnings based on their contribution to a 457(b).

How is such a contribution formula fixed or definitely determinable?

My employer has been contributing to a personal SEP-IRA account for the past 5 (or more) years. After switching accountants they were informed that in order to contribute to a SEP-IRA you must contribute to all the employees that meet the required criteria. What rights do the employees have to go backwards and collect send SEP-IRA contributions?

Sponsoring employer is a partnership who reports their income tax returns on a fiscal year basis ending August 31.

The plan is a calendar year 401k with a safe harbor match. Does the partnership report calendar year income for determining wages for the 401k or does they use their fiscal year income for 401k purposes ie calculating the match?

We administer a 60 participant 401(k) plan where one of the owners of the plan sponsor never wants to see one dime of traditional money in his account.

I explained to him that the profit sharing contribution must be traditional, but once deposited he can convert to Roth.

In this case, the plan sponsor decides each year if they want to make a profit sharing contribution. If so, they contribute it March 15 for a December year end.

For example, for the 12/31/15 valuation, we showed the $35,000 profit sharing contribution as traditional receivable. Then when contributed on March 15, 2016, we gave him a Roth conversion form. He signed the form March 16, 2016. We will provide him a 1099-R in January 2017 showing the conversion taxable for 2016.

He now wants to get as close as possible to never having any traditional money in his account. He wants his 2017 profit sharing contribution funded to his directed account January 1, 2017 and convert it to Roth the first week of January. Meanwhile everyone else (referred to him as traditional losers), will need to wait for their allocation until March 15, 2018.

Other than potential discrimination in operation for the timing of deposits, does anyone see a problem funding before year end and immediately converting to Roth?

Thanks.

Haven't ever seen this one. Suppose a non-profit has a formula of 10% of pay. In a given year, they contribute 15%.

There's no penalty for a nondeductible contribution because there is no deduction anyway. The question is, can/must it be ALLOCATED even though it violates the formula?

My inclination is no - it is an operational violation of the plan, so it needs to be carried over to the next year, for which they can amend the plan to increase the contribution if so desired. Any other thoughts?

Does anyone know a good way to find out when a Roth began on Relius?

Spouse of owner participants in Defined Contribution Plan A. Spouse dies. The owner rolls the funds from his wife's account to his account in Plan A. Do these funds constitute a related rollover or not for owner?