December 31, 2016 falls on a Saturday., Will Plan Sponsors have until January 3, 2017 to process corrective distributions for 2016, correct 2015 failed ADP/ACP with a QNEC, Amend for Safe Harbor, Amend for Discretionary Changes implemented during 2015? Or is the IRS' position, the deadline is the day in which if falls 12/31/2016 and NOT the next business day.

Thanks

We are using a prototype document. It says for the timing of contributions, they must be made by the Employer’s tax return date.

What happens if they are late? My guess is that it is an operational failure. But what is the remedy? EPCRS seems to be silent on the issue.

Under 436, both the AVA and the FT is to be adjusted by adding in the value of annuities purchased in the prior 2 years for NHCEs. If a plan purchased annuities for its entire retiree population, how would one determine NHCE vs. HCE, especially given that many retired more than 10 years ago? Since it was done as a single transaction with one purchase price, how would one be able to allocate the purchase price between NHCE vs. HCE?

Thanks in advance.

Client provided us a copy of all employee's w-2s to verify compensation. Employee A had $50,000 in Box 1 and Box 16 (state wages) of W-2 and nothing else.

Definition of compensation for plan is wages, tips and other compensation on Form w-2. I have not seen a w-2 like this before.

Are these wages included in compensation for plan purposes?

Wasn't sure where to post this one, so started in this forum....

The 1563 attribution rules have an exception for spousal attribution if certain conditions are met.

Husband owns 100% of his own business

Wife owns 60% of her family business (her siblings are the other two owners)

Husband works in and manages the wife's family business. He is deemed to own her shares for sure.

The wife has nothing to do with the husband's business, and her business is completely separate from the his business (no common customers, products, services, no income going back and forth, etc.).

Is the wife deemed to own shares in the husband's business?

I'm not sure if attribution exception is blown for one spouse, if that means it's also blown for the other spouse...

Thanks!

More and more, I am seeing MDs who close their privately operated practice and become hospital-based. Some outright become employees of the hospital. Others are entering into 'professional services agreements' that pretend the arrangement is independent contractor and the MD gets payments that the MD then claims as self-employed income (or runs through the payroll of the MD's professional corporation). The hospital seems content because the FICA/self-employment taxes are getting paid, even if not off of the hospital's payroll.

The hospital also excludes the contracted MD, as a "non-employee", from its employee benefits and retirement plans. The MD is highly compensated and so the MD's exclusion from those plans does not create a coverage or nondiscrimination problem for the hospital.

However, such 'contracted' MDs that are in reality employees of the hospital would like their own retirement plans. An employee cannot sponsor his or her own retirement plan, so it appears that such MDs run a risk of having the IRS disqualify a plan if audited and the IRS takes the position that the MD is an employee.

Or, if the IRS recognizes the MD as self-employed, then would such a plan have to benefit also those hospital staff paid on the hospital's payroll, but over which the MD primarily directs and controls them, i.e., as employees of the MD?

If the hospital is tax-exempt, then it might have a 403b and/or 457b rather than a 401k. So that would make the MD's 401k not permissively aggregable with the hospital's plans, so as to 'piggy back' off of the contributions the hospital makes to the 403b and/or 457b in order to demonstrate nondiscrimination by the MD's 401k.

Perhaps a 457f arrangement whereby the 501c3 hospital and the MD would defer part of the MD's compensation, but of course, MDs like other workers don't like the "risk of forfeiture" necessary to delay the taxation.

What are others doing with these types of situations?

Plan eligibility is age 21 and 6 months of service, with quarterly entry dates. Plan is a calendar year plan.

Employee is 32 years old when first hired. Here is the employment history:

Hired – 5/25/2011

Terminated – 9/16/2011

Rehired – 5/18/12

Terminated – 9/4/12

Rehired–5/20/13

Terminated – 9/11/2013

Rehired–1/7/2014

Based on the above information , what would be the employee’s entry date?

I raise this question because of the so called 'service spanning rule'. Not sure how it applies when service requirement is less than 12 months.

Plan participant has requested direct deposit of a plan payout to a bank account. The bank account is a joint account with another individual (not the spouse), and the plan has reason to believe the other individual is sketchy. Any thoughts on a) whether it is acceptable to pay to a joint account at all (since it represents payment in part to a party other than a plan participant), and b) whether the plan has any duty of inquiry to make sure, for example, that this is not a situation in which the right to payments has been assigned to a creditor?

My sense is that payment to a joint account is fairly common, and that so long as the payment is made pursuant to the request of the participant, the plan has no further duty of inquiry. After all, once a check was cut, the participant could transfer the money to another party herself. And I've seen in the past situations in which a creditor showed up with the participant, and the participant signed over the check to the creditor on the spot. However, I'm not finding specific authority on point.

Consider this scenario: An employee-benefit plan's administrator (the plan's sponsor) and the independent qualified public accountant disagree about a point of accounting for the plan's financial statements. The administrator considers its knowledge of accounting superior to the IQPA's knowledge.

The IQPA threatens to issue an adverse report. The administrator says "bring it on." The administrator does not fear that checking the "adverse" box at Schedule H's part III would trigger an examination because EBSA and IRS both have open examinations, with teams of examiners using office space in the plan's sponsor's headquarters. Also, the administrator does not fear the IQPA's explanation because the administrator confidently believes the IQPA is wrong.

Beyond widening and intensifying the open examinations, is there any other unwelcome consequence that results from checking the adverse box and attaching the report that explains the IQPA's reasons for its adverse opinion?

Is there anything in EPCRS that requires new hires brought in mid-year who will clearly be HCEs based on their annualized salary going forward to be treated as an HCE with respect to plan corrections during their first year even though they were classified as an NHCE for that first partial year for ADP testing purposes?

We have DB/PS Aggregated plans. Both plans exclude HCEs who are not owner. Plans are top heavy and some people will move in and out of the HCE classification, meaning that some years they are eligible for accrual/allocation and other years not.

1) For an EE who is an NHCE in year 1 (became participant ant received benefits) becomes an HCE in year 2, must he still receive a Top heavy minimum in year 2 since he is already a participant?

2) If answer to 1) is yes, may the TH min be provided by either plan?

We have a spin off plan from a multiple ER plan - which means a new EIN. In Part 2 of the new plan's 5500 do we report as "1st time reporting with EIN number" or do we respond as "name and EIN has changed?"

Profit sharing plan: Discretionary as to amount. Formula is currently integrated. Allocation conditions are standard (eligible to receive allocation if employed on the last day of the plan year or if terminated, worked more than 500 hours during the year).

We are restating for PPA and want to amend the formula to cross tested (each in own class).

Can we make the restatement effect January 1, 2015 (to be adoped before 12/31/15) so that the 2015 contribution will be allocated using cross tested formula?

Is this a protected benefit issue?

Or must we wait to make the effective date January 1, 2016 (and adopted before that date)?

Thank you.

HR is planning on implementing a spousal surcharge in 2016. I was wondering how others process this.

1. Do you make it pre-tax or post-tax?

2. Is it an additional deduction or do you add it to the premium? Does this affect it's pre-tax/post-tax status?

3. We currently offer a Cash Award to employees who opt-out of our insurance. If the opting out employee's spouse also works for the organization, do you charge then the surcharge if they pickup their spouse (who is an employee)? If so, does the waiving spouse still receive the cash award?

4. What about Domestic Partners?

Thank you

For Part I item 2, is it appropriate to report negative amounts, which seem to be less than $5,000. Recordkeeper and service provider are Fidelity who completed the form on their own with an amount about $(100,000)

I have a client whose business is an exempt service business, and whose wife is a real estate agent. He has a DB plan with himself as the only participant.

It appears that neither has any interest in or connection with the other's business, so I am not sure of the ownership attribution in this case.

He is the only employee in his plan, and wants to know if he should be paying PBGC premiums.

She does not have a plan.

normally employees would be considered to have a severance from employment and be entitled to distributions. does it make a difference that the entity acquiring the assets is a partnership and whether or not they are acquiring 85% of the assets?

we have a 401(k) plan effective 7/1/2014 - the owner makes well over 260,000 - isn't his compensation limited to 130,000 and are his contributions limits halved as well? We think his Safe harbor 3% is based on the 130,000 but an actuary says he is able to receive 52,000 total in contributions for 2014. Im researching, but need some feedback and cites if possible. Thanks.

A participant defaulted on a loan and though it was a deemed distribution, a 1099-R was not filed to report it. He went on to repay the entire outstanding balance afterwards which I understand should be considered an after-tax amount within the plan. Are the repayments still considered to be after-tax amounts if the defaulted loan was not reported as a taxable event when it became a deemed distribution?

If the repayments are to be treated as after-tax amounts, I presume that when it's time to distribute them that earnings on those amounts are taxable.

In last 2 days I have had 3 December year end clients have their extensions denied.

The denial lists October as the Tax Period. So the IRS is picking up the month we are extending to as the plan year end.

Am I the only one?

Any ideas on how this is happening?

Thanks

Earl