who dreams up these silly things?

http://blogs.haynesboone.com/index.php/2015/08/firm/benefits/recent-legislation-extends-form-5500-filing-deadline-for-tax-years-beginning-in-2016/

Recent Legislation Extends Form 5500 Filing Deadline for Tax Years Beginning in 2016

Posted on August 13, 2015 by Haynes and Boone Benefits Group in Practical Benefits Lawyer

The recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the Act) extends the filing deadline for certain Form 5500 filers for plan years beginning after December 31, 2015. Specifically, for plan sponsors who have obtained an extension to file the Form 5500, the Act increases the extension from 2½ months to 3½ months from the initial deadline. Accordingly, for 2016, a plan sponsors deadline for filing the Form 5500 for a calendar year plan, assuming the plan sponsor obtained an extension, would be November 15, 2017 (rather than October 15, 2017). At this point, it is unclear whether a similar extension will apply to direct filing entities, such as master trusts, and to the deadline for filing the Form 8955-SSA. However, the extension has the effect of extending the deadline by which Summary Annual Reports (SARs) must be provided, since SARs must be provided within two months of the extended deadline for filing the Form 5500.

The August CPI-U figure was released today at 238.316.

coupled with the July rate of 238.654 (awaiting the Sept value which is released Oct 15, it appears there will be no change in any limits next year. if the Sept value was 239.7 the DB limit would increase to 215,000, but I'm pretty confident that is not about to happen. And it requires a lot bigger jump for the other limits to reach the next level.

so, next year, same as this year.

The details on this are a little sparse, but any comments are appreciated:

A partnership exists but does not have a retirement plan, nor do they wish to sponsor one. However, one of the partners was interested in possibly having a SEP for herself. She receives only 1099 income from the business; She is not on payroll and apparantly for now, any money she makes is paid via 1099.

Does a loophole exist for her to use this 1099 income as a basis for establishing a plan only for herself? This sounds a little like an "as-needed" independent contractor who is paid via 1099. The big difference is that this is an owner. If she wanted to start a plan, who is the employer? If its the company,then I don't think she can without covering the others. If it is not the employer, who is and could she do a plan for herself?

Thanks

A small 401(k) plan is written to provide a safe harbor match. If the employer provides no profit sharing and no forfeitures are allocated (or they are allocated as ACP-free match), the plan is top-heavy exempt.

Suppose the plan is also written to partially exclude one sales person who is a Non-Highly Compensated Employee (not an owner and makes under $115,000). They are only excluded from the deferral and match portion of the plan.

The plan easily passes coverage by covering the other 8 NHCEs. The employer wants the sales person to still get profit sharing in the years that they actually make a profit sharing contribution.

However, in the years where no profit sharing is contributed, is the plan still top-heavy exempt (assume no forfeitures)?

post below related to calendar plan year example:

I have understood that although there seems to be no specific mention of effective date of fidelity bond coverage in the Form 5500 instructions, that we use the fidelity bond in effect as of 1/1. In practice, data requests happen after the plan year ends and coverage reported by plan sponsor tends to be as of 12/31.

Ability to purchase retroactive coverage is being advertised. When can retroactive be used?

Makes me wonder if current coverage, increased after 12/31 but prior to 5500 filing date can be used on prior year's 5500?

What date specifically is being looked at for the level of coverage on the 5500 - the 1/1 or the 12/31 level of assets?

A one-man professional corporation dissolved the business, so he is maintaining his DC plan as a sole proprietor. A resolution was adopted and the name of the plan was changed accordingly. However, a few years have gone by and the EIN is turning out to be a problem. There's a piece of property in the plan under the old EIN. The state is buying a chunk of the property and won't distribute the check because the EIN doesn't match the name of the plan. I'm thinking the sole proprietor might need to apply for an EIN for the plan, get the EIN changed on the property and see if that makes the state happy. This can't be the first time this has happened. Does anyone have any thoughts or a better idea?

If an employer is determining its full-time employees using the look-back method under Reg. Section 54.4980H-3(d), is that same look-back method also used to determine who the full-time employees of the employer are for purposes of Section 6056 reporting (Form 1095-C)?

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.