during the 2013 5500 audit, it was discovered the platform used the wrong compensation to allocate the profit sharing contribution. The platform will correct the allocation and deposit the "lost" income. This means some participants will get an additional deposit and some will have a portion of the contribution removed.

The question is does the client HAVE to notify the participants of the error. While it may be advisable to let the participants know what happened, want to know it it is required.

Thanks

Item (e) of form 6088 asks for compensation information. But the plan benefit formula is just service multipled by certain dollar amounts. Can I put N/A in that column or will the IRS insist that it be completed?

We have had "issues" with our existing 5500 preparation software, hampered by Tech Support at the vendor which was unavailable on the evening of October 15, so we are in the market for a new software package. We have multiple plans (4 retirement, 5 H&W) and the 5500s for the retirement plans have complex assets and schedules. Our 8955-SSA has been a particular problem because there are many hundreds of terminated vested participants in each plan and our current software could not upload the participant data, requiring it to be manually entered.

If anyone has any thoughts on their experience with FT William, I'd love to hear them!

I'm approaching my mid-fifties, and want to retire in 10 years.

After meeting with an agent from Paradigm Life (www.paradigmlife.net), they introduced me and my wife to a Whole Life Insurance Policy, aka the 770 account.

I did not look at Whole Life Insurance the way they explained it-being there is liquidity, a death benefit, tax benefits, and I can leave something of significance behind to my family.

Apparently the ultra-rich have been using this strategy to pass their wealth since whole life has been invented.

For those using IRA's or Roth IRA's this could be a better option.

Retirement Income

I am assuming that non-profit organizations have no individual owners. I have a possible new client the founder (HCE) of which has a daughter also working in the organization. The daughter does not and has not earned over $115,000 in any years, yet they are both treated as HCEs on the TPA's discrimination testing. Is the TPA somehow viewing the founder as an owner and then attributing that "ownership" to the daughter incorrectly? Thank you!

I'm looking for definitive written authority for what is clear: a participant who received a deferral refund resulting from a failed ADP test does not get to keep the match attributable to the refunded deferrals.

I'm an investment advisor and not a TPA, so I don't have access to the ERISA Outline Book or other such resources. Hoping someone can help me "prove" what is clear to a participant who is skeptical because it's not covered in the SPD.

Thanks

Need to determine if I have a control group and if possible to change the ownership around so that they are not controlled.

The children are all over 18 and do not work for any of the companies. Those controlling 1% ownership are also not employees.

Dad A and B are brothers.

Any help would be greatly appreciated.

Control group.xlsx

A client has a rather unusual request as to the profit sharing allocation methodology. The client would like to to able to:

1. allocate in the same dollar amount per Hour of Service for each Participant;

OR

2. in the same ratio as each Participant's comp bears to the total of such comp of all Participants;

OR

3. a combination of both. With complete flexibility to mix/match, or choose between one or the other.

Although both methods 1 and 2 are, individually, design-based safe harbor allocation methods, I believe the flexibility to mix and match takes it out of design-based safe harbor status. Am I nuts, or am I correct? (technically, I suppose the answer to both could be yes...)

Several years ago a 457f was set up for executive by setting up a "rabbi" trust which was funded with a one-time investment.

The earnings of this investment would be used to pay deferred compensation to the executive assuming employee stayed with employer for XX years and the original investment would be returned to employer at the end of agreement.

The Executive reached age 65 on April 1st 2014 and thus became 100% vested.

For illustration purposes let's assume the total trust account is now worth $300,000. $200K is the employee's portion and $100K was the original investment.

Since the risk of forfeiture ended April 1st 2014 should the employee's W2 for 2014 include the entire amount of $200K? or just the $40K?

If so, would the distributions made in years 2,3,4 & 5 not be reported at all?

Thanks in advance

Moni

In the for profit world there are stock sales and asset sales. Is there an equivalent to a stock sale in the non-profit world? Specifically a Church plan? Thanks.

As a Plan administrator, we are looking to request for the first time an Allocation of Revenue Credit to participant accounts. How do you communicate this credit to paticipants? Is it appropiate to add a message under the Year-end statement, even if some of the participants are not going to receive this credit? How specific you want to be on this message?

I am in the process of terminating a non-PBGC defined benefit plan in which the assets are less the present value of the accrued benefits.

Since the plan is not PBGC covered, I want to pay out benefits "to the extent funded"; that is, to have all participants share in the asset shortfall rather than having the owners waive/forego receipt of benefits.

Mike Preston has been telling us for years that this is acceptable in a non-PBGC plan but I have questions about the logistics:

Does the plan sponsor have to make some election/statement re this methodology?

What do I put on the participant benefit statements since participants are 100% vested in the full AB by formula but will only receive some % of that benefit (for sake of argument we can call it 90%)?

Anything else I need to consider?

FYI - client is not going to file for an IRS determination letter.

We don't have many clients where tips are an issue, so this hasn't come up.

So, plan defines comp as W-2. It does not exclude tips - which would likely be discriminatory anyway. The safe harbor match is an enhanced 100% up to 4%. It is calculated on a per payroll basis.

I'm fine with understanding that you can't defer on tips, (these aren't pooled tips) cause the employee has already received them. But the employees have to report their tips to the employer, who will then include them on the W-2 as taxable, etc., at the end of the year.

How does this mesh, in real life, with the safe harbor requirement? Is there a citation for not including the tip income in this situation when calculating the match?

It would seem like if the tip income is reported to the employer regularly, then a match would be based upon the total income, including tips, for that payroll?

Example - employee has a 10% deferral election. For a given paycheck, EMPLOYER compensation is $500, and there is $500 of tip income, for a total reportable amount of $1,000. So employee deferral for that payroll is ($500 x 10% = $50). Is the safe harbor match on that payroll ($500 x 4% = $20) or is it ($1,000 x 4% = $40?) I lean toward the $40 since I don't see a legitimate basis for excluding it, yet it seems like an absurd result.

For an employer Profit Sharing contribution, it seems like it would be based upon total compensation, so it would be based upon the $1,000 when it is eventually made - agree? Disagree?

We are having a "discussion" about the wording of the Normal Retirement age in a couple of new documents I have been asked to review. Do you think the following choices are the same or different - and why do you think that?

Choice #1: Attainment of Age 65 and 5 Years of Participation.

Choice #2: The participant's 65th birthday or the 1st day of the plan year containing the participant's 5th anniversary of joining the plan, if later.

Applicability dates. The multiple-employer plan reporting requirements under the CSEC Act apply to plan years beginning after December 31, 2013, which created an immediate need for changes to the Form 5500 and Form 5500-SF. Accordingly, the CSEC Act form changes in this document will be applicable beginning with the 2014 Form 5500 Annual Returns/Reports filed for plan years beginning after December 31, 2013.



the Annual Return/Report filed for a multiple-employer plan must include an attachment that identifies the participating employers in the plan by name and employer identification number (EIN) and includes for each participating employer an estimate of the percentage of the contributions made by each employer (including employer and participant contributions) relative to the total contributions made by all participating employers during the plan year. This attachment, entitled “Multiple-Employer Plan Participating Employer Information,” supplements and does not replace other Form 5500 filing requirements that apply to multiple-employer plans.

the complete article is found here

http://www.businessofbenefits.com/wp-content/uploads/sites/83/2014/11/Interim-Final-Rule.pdf\


ha ha ha - in the instructions is the following comment: (they always list the number of hours they estimate to complete the filing, so they say...


Based on data from the 2012 Form 5500 filings (the latest year for which complete data
are available), the Department estimates that 5,527 multiple-employer plans are subject to the requirements of the CSEC Act amendment (280 defined benefit plan, 4,739 defined contribution plans, and 508 welfare plans). The Department assumes that plan administrators will comply with the new requirements; therefore, the entire burden is hour burden.

ha - sound more to me like the entire burden is 'our' burden.

Which States have a State income tax treatment for Roth 403(b) amounts that differs from the Federal income tax treatment?

Which States have a State income tax treatment for Roth 401(k) amounts that differs from the Federal income tax treatment?

For an incorporated self-employed over 50 individual with no employees, am I correct that in terms of maximum deduction :

(1) 6% of Comp into the SEP + the full DB maximum

or (2) 6% PS , 23K ( deferrals + catch-up) , & the full DB max.

and of course limited by the 415 rules , e.g. part < 10 years , $limit, etc.

Here is the situation:

An employee met the 6 month eligibility requirement and entered the safe harbor 401(k) on 6/1/13.

He terminated employment on 3/31/14 and rolled his balance out of the Plan to an IRA.

He will be re-hired on 11/14/14.

Will he need to meet eligibility requirements again to defer or since he already did and it's less than one year, can he start deferring upon hire date?

Thank you.

Just wondering if anyone has used a spreadsheet to work out the Min. Funding Contribution for a Sole-Prop with a DB plan ?

I recall trying to do it years ago & as I recall it required a lot of trial and error - just wondering if anyone has tried it and, if so, how they went about it in general ?