For purposes of determining whether an employee is a full-time employee (for purposes of determining liability for the excise tax), while payment for hours in which an employee is entitled to payment for a period of time in which no duties are performed (such as vacation or holiday) have to be included in hours, if the employee receives pay in lieu of vacation or holiday, is that taken into account as hours of service? The employee is getting the pay but is not taking the hours for which the employee is entitled not to perform services. It seems to me that the answer should be no. Does anyone have a different view? If so, what are your reasons for taking that view?

Is it acceptable to sign a plan Adoption Agreement using a digital signature generated by Adobe Acrobat?

Thanks.

Small 401 was established in 2015. owners have not deferred into it but were funding their SIMPLE IRA. Can those contributions be reversed or should the SIMPLE file a VCP? I know IRC 408(p)(2)(D) states an employer cannot maintain a SIMPLE IRA and another qualified plan in same calendar year.

A participant took a distribution that attracts the extra 10% tax on a too-early distribution, unless the participant is totally and permanently disabled.

The plan's administrator approved the participant's claim for the distribution because the participant was severed from employment. (Nothing in the plan's provisions calls for any decision about whether a participant is disabled.)

The payer asked the plan's administrator to sign a form to state the administrator's finding that the participant is disabled. The administrator declined to sign, not only because it had not made such a finding but also because such a finding is unnecessary in the plan's administration.

The participant is worried that the payer will tax-report the distribution without putting the disability code on the Form 1099-R. She worries that the IRS's computer will flag her tax return as one that ought to have included the form for declaring the extra 10% tax on a too-early distribution.

Is the participant's worry grounded in BenefitsLink mavens' experience?

If the payer wants to respond to the participant's worry, may the payer make its own decision (without involving the plan's administrator), solely for tax-reporting purposes, about whether the distributee is disabled?

Rev. Proc. 2015-28 provides the new reduced correction amount for certain Elective Deferral Failures that extend beyond 3 months, but are corrected within the SCP correction period. However, in order to take advantage of this, technically correct deferrals must begin no later than.... and this isn't possible for a terminated employee.

So just soliciting opinions - would you go ahead and use the reduced 25% QNEC, or would you go with the "old" 50%?

Very small amounts involved - employer didn't withhold on same vacation pay.

last posted a few years ago, but here it is again

130 songs to identify by a picture.

simply type in the number of the song in the yellow boxes.

the song list is included on the spreadsheet

the first song is already solved as an example.

christmas puzzles- 130 to solve .xls

In fine Grinch fashion I am reposting this. (First posted in 2002 - Silver was only 4.50 back then so I had to update that))

Bah, humbug, this is worse than I thought, but that has no effect on my little heart..
.........................................................................................

This is a very bad joke. The punch line is going to hurt. What is really sad is I drag it out so long. I wouldn't be surprised if Dave Baker kicks me off for this one. Exit now before it is too late.

Ok. You were warned.

Our story takes place in Russia, back in the good old days, before the glorious revolution, before there was talk of ‘proletariat’ and ‘bourgeoisie’ and other terms I have no idea how to spell. And it concerns a certain Rudy Rudovich, who lived in one of the small villages that surrounded Moscow. Rudy was a poor dirt farmer. That is being kind, perhaps in a good year he had a bumper crop of ‘dirt’. You see, Rudy was missing a few screws, so to speak. And our hero was quite the hen-pecked husband.

Once when I was telling this joke someone stopped me and said I shouldn’t be redundant. Hen-pecked and husband go without saying. Now, I have to take the individual’s word for it. I have never been married, and as I am in my mid 40’s maybe I will never find that out. Well, anyway, it was “We need more firewood, Rudy” and all he could reply was “Yes, dear.” Or “Are you done with the dishes?” “I will get to them as soon as I finish the sweeping, dear”. Poor Rudy. Day after day. Month after month. Year after year.

If I had more time, I would explain where the term ‘hen-pecked’ comes from. But that is another bad joke, and it’s Christmas, and having you hear one bad joke is unkind enough for the season.
One spring day, the sky was dark and threatening. But it was mid-April, and Rudy always sowed the seeds that day, and he wasn’t about to break his pattern. His wife had invited some ladies over. They were playing bridge, and drinking tea, and eating cupcakes with frosting on them. You know, the ones cutely decorated with those little round silver candies on top. Yeh, I thought you knew. Well, Rudy grabbed his seed pouch and headed out the door. Oh, maybe some of you don’t know. Those little silver candies are called dragees. You can get about 2 ounces of them for a couple of bucks. Well, maybe if they are on sale you can get them cheaper, but they are not that expensive. And you get so many of them, I don’t think they would ever sell them in bulk. Did you ever read the label on them?

It says ‘Use only as a decoration’ and ‘Non-edible’. I’m not kidding. That’s why they make them out of sugar so kids won’t eat them. Yeh, right. But seriously, look at the ingredients: Sugar, corn starch, gelatin, acetic acid and silver. Honest. They actually use silver in making these. That’s why you aren’t suppose to eat them. You could get silver poisoning. Oooohhh. A plot for a muder mystery. Slowly poison someone by…oh, that’s another story. Anyway, do the math, silver sells for around $13.50 an ounce and you purchased 2 ounces of these things for a couple of bucks. There must be enough silver in these things to, hmmm. And that would be if you ate the whole container of them. Guess I wouldn’t lose sleep over whether you ate any or not.

Ok, see you learned something new, so maybe it was worth reading this far. Now leave before you get to the punch line because it is going to hurt.

Where was I? Oh yeah, Rudy was going out the door to plant the crop. About 5 minutes later there was a clap of thunder, and the skies burst forth with a torrential downpour.
Of course, one of the ladies blurted out “Guess it won’t be long before your husband comes back, huh?” to which his wife replied “Rudy? That idiot hasn’t got enough sense to come in out of the rain”

And so it was true. One hour, two hour, all morning rain, rain and more rain. And still Rudy had not returned. Finally, about lunch time Rudy swung open the door, soaking wet. The ladies looked up at this somewhat pathetic looking figure, but rather than express any words of comfort or sympathy, there was nothing but giggles. And then his wife let into him.

“Don’t you dare track mud in the house”

“Yes, dear”

“And don’t you dare hang your wet things over the furniture”

“I won’t. dear”

“Rudy, I swear, I don’t think you even know what rain is, do you?”

“Guess I don’t dear”

Looks like it’s gonna be another banner year for the dirt farmer!

So spring passed by, summer followed. One Wednesday evening, about 7 there was a knock at the door. Rudy’s wife looked up from her book and shouted “There is someone at the door”
“I’ll get it, dear” Rudy said, emerging from the kitchen, soapy hands, apron and all.

He opened the door, and standing there 6 individuals – members of the newly formed communist party. They had a very good sales pitch. “Be a Red, or be dead”. A convincing argument, especially when accompanied by the guns they brandished. They wanted Rudy to go their meeting that night, and, though he wasn’t the brightest, Rudy knew it was in his best interest to go. He had started to walk out the door when that old familiar voice resounded “Not until you finish the dishes, mister”
Rudy returned to the kitchen “Of course dear. How silly of me”
One of the communists took a step in and said “Listen lady…” but that was as far as he got.

“Excuse me. Did I invite you in?”

Wisely, he took a step back. Perhaps the world of events might have been different if there were more Mrs. Rudovich’s!
It took Rudy about 5 minutes to finish his chore and off he went. Secretly, his wife was glad. She put her book down, got up from her chair, went over to the bookcase, and behind the third book on the middle shelf pulled out a chocolate bar.
The Wednesday night meetings went on for about two months.
(By the way, I could have picked any night of the week, it has nothing to do with the joke if you are trying to figure out where this is headed. I will warn you again to give up on this one, it will save you a big groan at the end.)

After about two months, the communists (or Reds, if you will) decided they weren’t making much progress with Rudy. They convinced him he would best serve the party by simply growing food – they would handle the nasty end of things. They even managed to convince him it wasn’t a good idea to plant in the rain, as the seeds washed away. And to top things off, they gave him a red bandana to wear. “Remember Rudy, be a Red or be dead” Wear it for your health. Rudy was only to happy to comply.
Fall came and went, followed by winter. Rudy put up a Christmas tree (well, this is a Christmas joke, I have to fit Christmas in somewhere). It was one of the few times of the year there was peace in the house. Ok already, the rest of the year his wife gave him a piece of her mind. But that’s not the punch line I have been warning you about. It is coming. Beware!

Spring came at last. And it was almost like déjà vu. Threatening skies. The wife had the ladies over for bridge. There were iced cupcakes, but no silver candies on top this year. No, not because they were worried about the warning labels, but simply because Rudy’s wife was on a diet.

Rudy headed out the door armed with his seed bag. And just like last year the skies opened up. Terrible rainstorm. Of course the ladies started in with some nasty remarks, remembering last year’s fiasco. Finally, to climax the snide remarks Rudy’s wife said “I told you that dolt doesn’t know what rain is”
And at that moment, the door swung open, and banged against the wall. Now Rudy’s wife was sitting in the chair with her back to the door. She didn’t know Rudy was dry – he had been standing under the eves on the porch rather than being out in the garden. The other ladies were somewhat speechless, so his wife, bidding 2 hearts, added “Don’t track mud in the house”

“Not muddy dear” Rudy replied.

“Well don’t drip water all over the place”

“Not wet dear” came the reply.

“Look, Mister. Don’t get wise with me. I know you don’t have enough sense to come in out of the rain. Like I was telling my friends, you don’t even know what rain is. Just what have you got to say for yourself?” And turning, her jaw dropped as she saw her husband standing there, dry and clean.

And the Rudy, waving that red bandana the communists had given him simply said

“Rudolf the Red knows rain ….dear”

I warned you it was bad.

A participant elected a 5% deferral to begin January 1, 2012. She just notified her employer that the deduction was never started and she also missed out on the match. It's been 4 years and she never mentioned missing the deduction until now. Does anyone know of a time limit on the correction for the missed deferral?

I know you are only permitted to take a distribution from an IRA and re-contribute it back within 60 days to avoid taxes 1 time per year.

Is there a limit on how many times this can be done per year in a 401k plan? I would think there are no limits since I can take multiple distrubutions from a 401k plan (assume age 59.5) within a given year, and as long as those distributions are rolled into an IRA within 60 days, it is not taxable ignoring the taxes that were withheld on the initial distribution.

I have a potential client that took 5 distributions (taxes withheld) from his 401k plan in 2015, but paid all disitrubitons back with 60 days. I beleive this is OK, please let me know your thoughts.

Thanks

If a plan adds a match with a set formula mid year and begins deposits on a per payroll basis, but does NOT sign and execute the document - are the match contributions considered ineligible since the document was not properly executed and therefore Match contributions were not a feature of the plan?

Can I get a citation for the answer? Can't seem to find it. In my opinion it is an operational and document failure.

Thanks.

Good evening,

I could use some help in determining the entry date for an employee who, on two occasions, worked a short period before terminating, and was ultimately hired full-time after his second termination. He never met the service requirement prior to being terminated on either occasion, but currently has satisfied it.

The potential issue is, the plan sponsor allowed the employee to participate on the entry date following his satisfaction of the service requirements following his most recent hire date, but I am of the opinion that he should not have been allowed to enter the plan until the beginning of the most recent plan year.

Plan specs are as follows:

Plan Year is 11/1 - 10/31

Plan eligibility is 1 YOS/Age 21 with monthly entry dates

Actual hours counted (1000)

No BIS rules apply

ECP shifts to plan year after initial ECP ends

Paraphrasing & summarizing plan's master document provision regarding rehired Eligible Employee who failed to satisfy eligibility requirements: for purposes of applying any shift in ECP, employee's prior service is taken into account and employee is NOT treated as a new hire (emphasis mine).

Employee data is as follows:

Birth date: 6/27/90

Initial Hire date: 6/28/10

Initial Termination date: 8/25/10

1st Rehire date: 5/11/13

2nd Termination date: 8/16/13

2nd Rehire date: 5/12/14

Plan sponsor allowed EE to begin participation after 6/1/15

Hours worked during ECPs (using my understanding of plan document):

6/28/10 - 6/27/11 - 246

11/1/10 - 10/31/11 - 0

11/1/11 - 10/31/12 - 0

11/1/12 - 10/31/13 - 527

11/1/13 - 10/31/14 - 960

11/1/14 - 10/31/15 - 2080

The plan sponsor, I believe, began a new ECP as of 5/12/14, and has credited the employee with a year of service as of 5/11/15, allowing him to participate as of 6/1/15. I believe that, since there are no BIS rules in effect, and the plan document does not seem to allow for "resetting" the ECP to his latest rehire date, that he should not receive credit for a YOS until 10/31/15 and he should not be allowed to participate until 11/1/15. (Our recordkeeping software agrees with me, not that that means anything.)

I actually hope I am wrong on this one because the employee has been making deferrals since June 2015 and received an employer contribution for 10/31/15, so corrections would be in order if I am right.

Thanks to anyone who read this far...

Board approved a profit sharing contribution of 5% of pay but cash flow turned around (and is now very bad). Can someone point me to something that will clarify that the discretionary nature of the contribution survives this resolution and can therefore be eliminated/reduced to zero? Obviously the contribution has not been funded yet.

An attorney once answered this question in a very straightforward manner: "The contribution is discretionary."

It is interesting how Congress and media refer to the closing of a Social Security loophole when they modified/rescinded the file-and-suspend strategy.

When my wife turned 65 and applied for Medicare, we went to a Social Security office to discuss Medicare along with retirement strategy. The SSA recommended that at 66 my wife apply for Social Security, delay her start to age 70 to get the 8% sweetener, and start taking 1/2 of mine, which she's been doing for two years.

Interesting that SSA was disclosing and recommending the strategy that Congress identified as a loophole.

I haven't had to do this in quite a while. The ADP test failed. The related match will be FF, if applicable. Do you use the ADP Excess Amount or the SBJPA Distribution Amount to calculate the related match?

An employer sponsors a 50 participant 401(k) plan.

They recently leased an employee for the first time. She has now been working with them for 6 months and now the plan sponsor wants to hire her.

Even if she would have stayed with the leasing organization, she worked 35 hours a week and after one year would be considered "substantially full time" and would have had to be included in the plan.

The leasing organization does not maintain a plan of any kind.

Would the 6 months of service with the leasing organization count toward hours for eligibility and vesting once they hire her as an employee?

Thanks.

CPA has asked the following:

Mr A is a 401k participant with his wife as beneficiary

Mr. A dies unexpectedly

2 months later Mrs. A dies after a long illness

Mrs. A does not re-designate with the 401k her beneficiaries

His estate beneficiaries are different than hers ( I don't think this matters. I believe at this point, the account balance belongs to her beneficiaries)

The 401k plan as currently written will only allow for either a lump sum distribution to her estate or for distributions to be made to her estate over 5 years.

That would leave us the alternative of her beneficiaries reporting the 401k all in one year or keeping the estate open (with a 1041 each year) for 5 years.

It also complicates the form 1041 (I have not researched this yet) in that we would need to allocate the 401k income passed to the estate to her 3 beneficiaries while allocating the other estate income to his family.

Can the 401k be amended now so that it could be rolled over into 3 IRAs- Estate of Mrs. A fbo beneficiary 1,2,3?

If not can it be amended to allow the 401k to be rolled over into one IRA Estate of Mrs. A which could be subsequently split into 3 Estate of Mrs. A fbo beneficiary 1,2,3?

Thanks for your help on this.

I'm hoping there are enough ACA geeks lurking on BL to make it a good forum for sharing questions and ideas on the details of the new 1094-C and 1095-C.

Here are my first 3:

1. Does a code have to made on Line 14 of the 1095-C for all months even if the employee is full-time for as little as 1 month? I think YES.

2. Can line 16 be left blank? I think YES.

3. If an employer claims 50-99 mid size penalty relief for all of 2015 on Form 1094-C can they safely leave line 16 on all their 1095-Cs blank since they will be exempt from both the "a" and "b" penalties?

Thanks

When drafting a board resolution that indicates the amount of an employer's discretionary profit sharing contribution, is there any compelling reason (legal or practical) to list the amount to be allocated to each individual employee? I have someone who wants it done that way and I don't think it makes much sense. Any thoughts?

We have a safe harbor 401k plan that has terminated this year. We have paid everyone out in the past few months. We just found out that the employer gave us the wrong compensation for the final compensation to use for the Safe Harbor Non Elective contribution. The brokerage company that held the assets has closed all the accounts. Can the employer just issue checks to the various IRA's of the participants to make them whole. Or do we need to open a new account with said brokerage to pay out of that account to the Participants. There are about 25 Participants that would be due an additional amount.