The recently released Rev. Proc. 2014-61 announced many cost of living adjustments for various tax provisions. Buried in Item 26. appears to be a new definition for High Deductible Health Plan featuring significantly higher minimum required deductibles effective in 2015. This is compared to the amounts previously announced in Rev. Proc. 2014-30 back in April. The change is raising the minimum deductible from $1,300 to $2.200 and from $2,600 to $4,450 for individual and family coverage, respectively.

Am I reading this correctly? It's making me nervous that I have seen no coverage of this issue.

Client A owns two companies. The first company employs all non-family members. The second company employs his wife and three minor children, twins that are 7 years old, and a 2 year old. The client wants to start a 401(k) plan and have the two companies be part of a controlled group.

Question - are the minor children truly eligible for the 401(k) plan? What would that do to year end testing if they were?

Do I need to be concerned if the company being acquired has no retirement plan? Will they be included for coverage test?

We were considering the delivery of the restated PPA document by electronic delivery as opposed to a bound paper copy.

One concern is that no one will have an original signature on the documents.

With so many clients going paperless, is it still required that the client maintain a copy of the plan document with original signatures?

Will this "pass" in an audit?

ok, since I am posting this it is questionable as to whether it is humor or not, certainly as questionable if not more so than any posts on the pension board I make.

warning: read at your own risk, maybe best on an empty stomach.

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Fred was in the fertilized egg business. He had several hundred young'
pullets,' and ten roosters to fertilize the eggs.

He kept records, and any rooster not performing went into the soup pot and was replaced. This took a lot of time, so he bought some tiny bells and attached them to his roosters. Each bell had a different tone, so he could tell from a distance, which rooster was performing.

Now, he could sit on the porch and fill out an efficiency report by just listening to the bells. Fred's favorite rooster, old Butch, was a very fine specimen, but this morning he noticed old Butch's bell hadn't rung at all!
When he went to investigate, he saw the other roosters were busy chasing pullets, bells-a-ringing, but the pullets, hearing the roosters coming, would run for cover.

To Fred's amazement, old Butch had his bell in his beak, so it couldn't ring. He'd sneak up on a pullet, do his job and walk on to the next one.

Fred was so proud of old Butch, he entered him in the Brisbane City Show and he became an overnight sensation among the judges. The result was the judges not only awarded old Butch the "No Bell Piece Prize," but they also awarded him the "Pulletsurprise" as well.

Clearly old Butch was a politician in the making. Who else but a politician could figure out how to win two of the most coveted awards on our planet by being the best at sneaking up on the unsuspecting populace and screwing them when they weren't paying attention.

Vote carefully in every election, you can't always hear the bells.

If employer says "I'll contribute $300/month/employee towards the small group age banded premium" won't that violate the ADEA regs which say it's OK to require all employees to pay the same percentage of their actual premium but a violation to charge older folks a higher dollar amount?

Can anyone provide some guidance here. We are having a discussion in the office as to what constitutes number of days in the denominator when calculating lost earings.

Employee A did not receive a $1000.00 salary deferral contribution to his account that was due 7/1/2014. The deposit is not made until 10/1/2014.

From the Alliance investment statement, the rate of return for the period 7/1 to 9/30/14 was 10%. What would you calculate his lost earnings to be?

There are two schools of thought in our office. First group say his lost earnings would be $100. (1000 x 10% x 92/92)

The second group say $25.20. (1000 x 10% x 92/365).

The language on the Department of Labor website talks about 'annual' or 'annualized' rate of return for lost earnings calculation. How is the calculation affected when the rate of return is per a period less than one year?

I have filed a 5500 EZ for a Sole proprietor in 2012 and 2013 with the owner's social security number for sponsor's EIN. Yesterday the client received a letter from the IRS saying that the 2013 had the wrong EIN. They stated that the form had the owner's social security number and gave a number that they said was the correct one. The owner has no idea what this number is or where it came from.

Does anyone have any suggestions?

May an employer's ERISA-governed health plan make void a participant's attempted assignment of his or her right to get a payment concerning a covered medical service?

An employer maintains a health plan. For the plan's eligibility provisions, the plan defines a full-time employee as one who regularly works at least 40 hours a week. Being a full-time employee is among the plan's conditions for eligibility.

A consultant told the employer that it cannot maintain the 40-hours condition, and must change it to 30 hours. The employer replied that it is fully aware of the play-or-pay excise tax, and nonetheless prefers to maintain its 40-hours condition. The consultant continued to assert that the employer MUST change to 30 hours.

Apart from offering coverage so as not to attract a play-or-pay excise tax, is there some other law that constrains an employer's choice about which of its employees is eligible for its health plan?

Should a plan sponsor include language that the plan intends to be 404© compliant in their annual QDIA notice? I can't find that it's required, but it would seem to make sense to me to put it in there. thoughts?

I'm trying to assist an alternate payee on a QDRO who had distribution check made out to her current employer plan and now needs the money and wants the check reissued to her. She wants to avoid the 10% penalty and can't roll it in and out of her employer retirement plan without incurring the penalty. Fidelity refuses to reissue her check stating that the distribution has already been reported to the IRS. I think that's a bunch of BS. Fidelity hasn't issued 1099Rs yet so participants should have the ability to change their mind on a distribution, don't you think?

I'm trying to lodge a complaint with the IRS but don't have any good contacts there or phone numbers and have been sitting on hold for 20 minutes.

Any suggestions?

Advisor says I will open an individual brokerage account for those participants who have at least $500,000 if they choose to do so. What are the implications of including accounts outside of the plan in that determination? So let's say the Participant has $100,000 in the plan and $450,000 in an IRA? the total relationship exceeds $500,000. The criteria was established by a party independent of the Plan so it shouldn't be discriminatory.

It doesn't seem at all like the self dealing issues where the financial institution throws in free banking services for the sponsor.

The brokerage account would hold only stocks, bonds and mutual funds, so I think it is ok to assume that the participants (who can invest in all of these things through mutual funds) have substantially the same opportunities.

We are working on a "spin-out" of assets from a multiemployer defined contribution plan. The assets from certain union members' accounts will be transfered to a new multiemployer defined contribution plan.

The existing plan is in the process of adopting a trust agreement amendment authorizing the transfer, but they are insisting on sending the amendment to the IRS for approval prior to actually sending the assets to the new plan.

Has anyone ever heard of sumitting such an amendment to the IRS for approval? Will the IRS approve such an amendment? Is there a process for seeking IRS approval for a trust agreement amendment?

Any help would be appreciated.

A Plan Sponsor is starting a new Plan effective 1/1/2015, but does not want to start the EACA Auto enrollment feature in the Plan until 3/1/2015.

Does this affect if refunds could be processed for participants who are automatically enrolled after 3/1/2015 and want their money back within the 90 day window?

Plan allows for 1 year, age 21 with dual entry dates 1/1 and 7/1.

Client has had a July 31 C-corporation and a July 31 401(k) year end for many years. They switched to an S-corporation with a December 31 year as of December 31, 2013. We just heard about this for the first time now.

We are trying to determine what to do now that the plan year runs 8/1/13 - 7/31/14 but the tax year is now 1/1/14 - 12/31/14.

We are thinking about the following sequence:

1. Base the profit sharing contribution and allocation on salary from 8/1/13-7/31/14 and take the deduction on the 1/1/14-12/31/14 S-corp tax return as long as it does not exceed 25% of eligible plan salary for the period 1/1/14-12/31/14.

2. Next Amend the plan to have a December year end. This would then create a short year from 8/1/14 - 12/31/14. They would again make a profit sharing contribution for the short year and deduct it on the 1/1/14-12/31/14 S-corp tax return as long as both the contribution in #1 above and the contribution for the short year do not exceed 25% of eligible plan salary for the tax year 1/1/14-12/31/14.

Does anyone agree or disagree with this?

Thanks

Ex-client sponsors a 401(k) that is now being TPA'd by one of the payroll companies, and the broker wants our input on the issue of starting a new plan:

" A Qualified Retirement Plan may not be established until 12 months after all the assets have been distributed from the current plan."

As far as we know, the 12 months refers to the timing the IRS gives to liquidate the plan assets in order to qualify as a valid termination; but nothing about establishing a new plan during the time thst another plan exists.

Souns to me to be a lame reason for the TPA scare the client into keeping the plan, or possibly this is a part of the Serving Agreement that TPA is reminding client that he signed upon takeover.

Any validity, or is TPA attempting to keep the case??

Employer has a perfectly 409A-compliant phantom stock agreement with an Employee that provides for payment at Separation from Service or Change in Control, whichever occurs first. Employee now wants to receive some sort of interim payment, and Employer is willing to pay it, but only if it would serve as an offset to any future payment at Separation from Service or Change in Control. If this is done clearly it is an impermissible acceleration and not only is the interim payment subject to the additional 20% tax but the entire agreement blows up and is subject to the additional adverse tax consequences under 409A on vested amounts under the agreement.

Can we handle it differently?

1. Terminate the existing agreement and pay the Employee $X.

2. Simultaneously, and as part of the negotiated package, the Employer and Employee enter into a new and identical agreement that by its terms is 409A-compliant, but the amount payable at Separation from Service of Change in Control under the new Agreement is reduced by the amount paid per #1 above.

3. It is aknowledged that the payment of $X is an impermissible termination/acceleration and the $X will be subject to the additional 20% tax. But, is the new agreement also in violation of 409A from the get-go because of the substitution principle?

Plan is failing ADP test. One participant has 27,096 in deferrals.

6,616 is from 10/1/2013 to 12/31/2013 - he deferred a total of 23,000 for 2013.

20,480 is from 1/1/2014 to 9/30/2014

Can I use 8,480 as the catch up for the 9/30/2014 test? 5,500 from 2013 plus 2,980 for 2014?