Do you generally recommend that your clients maintain a fidelity bond for SIMPLE IRA's? What factors should be considered in making the determination? The guidance that "such plans are generally structured in such a way that if any person does handle funds or other property, that person will fall under one of the financial institution exemptions" seems to lean toward the bond not being necessary. However, if the employer or a payroll company handles funds, how does this fall under the scope of the financial institution exemptions?

The employer maintains a 3% Safe Harbor Plan. Currently distributions are issued the plan year following a one (1) year break in service. SInce this is a daily valued plan, the employer wants to change the payout to immediately followign the date of termination.

Although this change has no impace on the 3% safe harbor contribution, I do not believe any guidance that would allow this mid year amendment.

The employer would need to wait until next year for this change. Amend the document prior to the close of the current year and then effective 1/1/2015 allow for immediate distribution

Do you agree?

On application for a favorable determination letter the IRS website states

Interested parties generally include all:

• Present employees of the employer who are eligible to participate in the plan, and
• Other present employees of the employer whose principal place of employment is the same as that of the employees eligible to participate in the plan

I noticed today while perusing the new ASPPA website that the yearbook link is missing. I called them to inquire and was informed they are not planning on offering the yearbook anymore - online, in-print, at all. It's still listed on the website as a "member benefit."

Boo, ASPPA. Anyone else think you're going to miss the yearbook?

Accountant came to me this morning with an odd one -

Instead of e-filing for an extension on Sunday, she inadvertently e-filed the tax return itself. So she's all freaking out, because now our common client has a day to come up with his 2013 retirement plan contributions for himself and the staff.

I inquired why she couldn't just STILL file for an extension, either on paper or electronically, and that way the employer (sole prop) could still take until October 15 and use the extension to file a perhaps-amended return?

She mentioned that once you've filed, you can't then request an extension.

Anyone know the statute on that, of the top of their head? Thanks.

--Bri

It was always my understanding that if a participant elected an optional form of benefit prior to his/her annuity starting date, then died, the plan could permit that election to stand and honor that election. I can't seem to find the appropriate Treasury regulation. If you think this is doable or are aware of the regulation, please let me know. Thanks.

Just took over a plan where the definition of compensation is W-2 without adding back salary deferrals. So for the regular employees, that's easy enough - just use Box 1 from the W-2.

The partners, though...the basic plan document says that it is their Earned Income, which is defined as

...Net earnings shall be determined without regard to items not included in gross income and the deductions allocable to such items but with regard to the deduction allowed to the taxpayer by Code section 164(f). Net earnings shall be reduced by contributions to a qualified plan to the extent deductible under Code section 404.

I'm not sure if this really gives me the authority to subtract the partner's deferrals from what the K-1 calculation yields. Of course I want to, because that makes sense, but is that how this reads? And no, the K-1 amounts aren't over $255K.

Thanks for your input...

Hello all,

So my wife decided to stay on with the new born and out three year old this year

and hasn' worked since Sept 2013 and I have some questions regarding

contribugtions to her IRA Account.

1) Since I am the sole earner now, can we still still contribute to BOTH of IRA's for the 2015 calendar year?

I make IRA contributions at the begining of the year.

2) I've heard that she has to earn income more or matching the amount that we contribute to her IRA.

Is that accurate?

So if she earns $5,500 in 2014, we can contribute $5,000 in 2015?

3) Does stock dividend interest payments from a non IRA account qualify as "earned income"?

4) Does the sell of publicly traded common stock qualify as "earned income"?

IE: purchase shares low and sell high

Thanks for the answers.

Sole proprietor with no employees.

Setup SEP/IRA and has made max contribution for 2013.

Can she also contribute $5500 to a traditional IRA?

Now that we're somewhat down the road in 404a5 fee disclosure requirements is anyone aware of any push from ASPPA or any other organization to question or otherwise confront the requirements of this rule? It's becoming a bear to live with especially as an investment provider that is seeking to maintain a strong core menu for the 401k plans it manages. Anytime there's a change to the menu, there are 30 day notices to provide and 404a5 disclosures to update going to an audience that is just not reading or understanding the material. I'm all for full disclosure to participants but the time and cost here don't seem to equal up to the benefit of making these disclosures.

Any comments or chiming in appreciated!

Have a situation where we can demonstrate employer intent, both by clear instructions to the plan document provider and actual operation of the plan, but document provider made a scrivener's error in a plan amendment.

I know IRS historically doesn't recognize scrivener's errors but wondering if anyone has seen any losening of that position or whether an anonymous VCP filing would just be a waste of time?

Thanks

I have a question that I have been searching high and low for a clear andwer on and have not found one. Here is the fact pattern:

Employer offers two health plan options to employees, 1 HMO and 1 PPO. Total premiums for the HMO are on average $9,000 and the employer pays $7,000. Total premiums for the PPO are on average $13,000 and the employer pays $8,500. All premiums are excluded from medicare taxable wages (no payroll or other tax applied).

All full-time Employees are eligible to participate in either of these plans with those levels of contribution. Due to the lower employee premium cost of the HMO plan, most low wage employees choose that plan while a higher percentage of the higher wage employees opt for the PPO. The average wage of a participant in the HMO plan is around $25 and the average wage of a PPO plan participant is around $41.

My understanding is that for premium only plans the safe harbor eligibiltiy test is all that must be met. Does the fact that there is no discrimintation in what is offered to employees mean that the eligibility test is met? Or since the PPO is weighted towards higher compensated employees higher wage employees and PPO members get 1) a higher premium contribution from the employer and 2) more wages sheltered from taxable wages is the eligibility test potentially failed?

Does anyone know who far out (decimal places) the MAP-21 rates go before being rounded (after applying the corridor) and are they rounded to nearest or up or down? Thanks.

Can a 401(k) Plan be amended mid-year to adopt regular (non-EACA & non-QACA) auto enrollment or must it be effective the first day of the next plan year? Thanks.

If a plan failed the ADP test for the 2012 plan year, did not distribute the excess contributions until after the 3/15/2013 deadline, and then did not file Form 5330 to pay the 10% excise tax by the deadline of the last day of the 15th month following the close of the 2012 plan year, how is this corrected? Would the plan sponsor file the Form 5330 and pay the excise tax even though it is past the deadline? (Assume the IRS would assess some sort of penalty/interest for the late filing of the Form 5330....) Is there some other correction that would be required due to the Form 5330 not being filed on time?

I used to use Judy Diamond for marketing purposes to get current plan information and contacts for a particular geographic location. They have gone up considerably in price. Does anyone know of a similar firm/website that provides this information? Any help is appreciated.

So someone just blew my mind. Is it true that if 2 501c3's are under common control (in fact in my case, it's a parent subsidiary situation) that you do not have to have both organizations covered by the plan? In other words, universal availability applies only to each entity completely independently?

Would just regular coverage apply, or does that even apply?

I don't have much experience with 457b governmental plans and a recent discussion has me confused.

What is the annual additions limit to a governmental 457b? For example, an employee defers $23,000 to the plan for 2013 (catch up eligible). The employer matches 100% on first 3% deferred. Based on his compensation the match would be $3,000. Total contribution would then be $26,000.

However, for some reason I was thinking the annual additions limit was $23,000 (assuming catch eligible) including both employee and employer contributions. Therefore, I am confused on what is the annual additions limit in a 457b governmental plan?

Thanks for the help.

Haven't seen this one, although it perhaps isn't all that rare. And I have no other details other than the following.

Employer merged with another business at some time in the past. The other business had a plan that allowed participant loans, and those loans were transferred to plan of new employer. To make a long story short, the participant loans were originally set up for weekly withholding, and the new employer had bi-weekly payroll, but continued to withhold, on a bi-weekly basis, the original weekly amount. So under-withheld by 50%.

So, even though the loan was correctly set up, withholding was incorrect. It is now WELL past the original 5-year limit - by a year and a half, and there is still an outstanding balance.

Since they are beyond the original 5-year maximum period, under Revenue Procedure 2013-12, Section 6.07(2)(a), it appears that this can't be "fixed" - even under VCP. It is just a deemed distribution, no correction available.

Is there any other solution that I'm missing? I know that the listed corrections in the Revenue Procedure are not the EXCLUSIVE corrections, and I wondered if anyone had submitted under VCP to attempt to correct such a situation anyway.

As a practical matter, since the loan was mostly paid off and the deemed distribution would be small, I suspect the employer would just make the participant "whole" outside the plan, because the cost of VCP filing and correction would exceed the cost to make the participant whole.

Client had a DB plan with 5-year cliff vesting. A participant terminated in 2012 and took a distribution. The client froze the DB Plan effective 12/31/13. It started a 401(k) plan with a match on January 1, 2014. The participant who terminated in 2012 was rehired in 2014.

Does the client have to credit the participant with eligibility service under the 401(k) plan on the date of rehire? I think the answer is yes for two and 1/2 reasons.

First, no 5-year break and thus service not lost. Second, the participant was not a participant in the 401(k) plan, and the rule of parity only applies to participants. Since the terminated individual was not a participant in the 401(k) plan, the rule of parity does not apply for purposes of crediting service under the 401(k) plan. The second and one-half reason is that even if you consider the DB participation as being a participant for purposes of applying the rule of parity to the 401(k) plan, the participant was vested and thus the rule of parity does not apply.

Change the facts a little. What if the employee did not participate in the DB plan and terminated in 2008 after being with the company for over five years and working over 1,000 hours in each of those years. In that case the individual would not have been a participant. Does that mean the years credited before the 401(k) plan have to be counted for eligibility puropses even though the employee was gone for more than 5 years?