Company A with Plan A is a controlled group with Company B with Plan B. Neither company participates in the other plan. Both plans are 401ks with 3% safe harbors. Company A has 1 HCEE and 20 NHCEES. Company B has 1 HCEE and 300 NHCEES. The coverage ratio for the HCEES is 50% in both plans. Therefore, we need a coverage ratio for the NHCEES of 35% in both plans. Plan A would have 20/320 or 6.25%. Plan B would have 300/320 or 93.75%. Plan A would fail coverage. How do we correct? Thanks for your assistance.

Hello all,

A company buys another company and now owns it 100%. Both companies had plans prior to the acquisition, and the parent company wants to maintain both plans after the acquisition. Both companies have about 70 employees.

I know that for testing purposes, we have 140 people to consider, but what about for audit count purposes? I saw a similar thread from a few years back where the respondents indicated that you can avoid the audit requirement by maintaining two separate plans like this so that neither goes over the 100/120 limit.

If that is correct, can someone please point me to some regs, or even something in the ERISA Outline Book that backs that position? I can't find anything one way or the other.

Thanks!

A participant (in a 401(k) plan) has a foreign address (they moved out of the country, unclear as to whether this was before or after terminating service). We utilize state of residence (for tax withholding), but this is a first.

When a distribution is processed, what tax withholding is necessary? Is the withdrawal subject to US federal taxes? Does the answer vary depending on the county?

We are a small company that is part of a very large PEO. We went with them primarily because of the lower medical premium rates. The PEO is partially self funded and partnered with a major Health Insurer. One employee left and their cobra rate quoted was substantially higher than what he was paying, even after adding in the company contribution. Hypothetically, he was paying $350/mo and our company was contributing $200, but his quoted cobra prem is way above $550 - far beyond the 102% allowed (around $1100). I think it has to do with the fact the the PEO is partially self insured as what we pay in medical is referred to an allocation and blended in with the combined rate for taxes, work comp, unemployment, insurance, etc. We are being told that the major Health insurer the PEO is partnered with is offering an equivalent coverage policy for cobra, despite being more expensive. My first reaction was that this in not in compliance with Cobra. Has anyone dealt with this issue before - cobra rates for self funded (or partially self funded) plans? There seems to be some ambiguity in determining the rates, it can't be that far off. Draper vs. Baker Hughes, Inc doesn't address this 100%, but still seems to point to a uniform rate for cobra recipients.

I have a client who is a sole proprietor & sponsors a Simple IRA. She was unaware that the deadline for her to deposit her 2013 deferral contribution was 1/30/14. She thought she had until her 2013 Schedule C income was determined. If she makes the deposit now can she correct under the IRS VCP? Would an IRS Compliance letter allow my client to take a 2013 deduction for her deferral contributions or can the deduction be taken in the year of correction?

A non-electing church plan erroneously excluded eligible employees and did not allow them to make elective deferrals or receive the match. The correction methods are clear when you have a qualified plan. Would the same corrective measures apply to a church plan and will the IRS accept a VCP application for a church plan?

Thanks for any insights.

Profit sharing plan has an integrated formula. The doctors want to have portions of the contribution deposited during the year so that they can get those funds invested in their brokerage accounts. All employees have brokerage accounts and all employees will receive a portion of their contribution deposited during the year at the same time as the doctors.I am trying to come up with all the potential problems with this arrangement from a compliance standpoint. I understand that this would be a BRF that would need to be tested. How much has to be deposited for the NHCEs compared to the HCEs for this to pass the BRF? I understand the math of the BRF test, but how much would the NHCE have to receive to be considered "benefiting" for testing purposes?

Any thoughts on this issue are appreciated. Thanks. I did search the forum and have been reading the other threads.

A nonresident aliens who was excluded under the terms of a defined benefit plan was inadvertently allowed to participate. Date of hire as a nonresident alien = 10/1/03. Allowed to participate on 1/1/05. Date nonresident employee became a resident = 6/9/11.

Questions:

1, Should eligibility service credited from original date of hire (10/1/03) or from date the employee became a resident (6/9/11)?

2. Is this required to be corrected under an IRS program (only self-correction method I saw was for 401(k) plans using a retroactive amendment. We don't want to bring this participant in early)

3. Other than recalculate the employee's benefit using the correct entry date, what other issues are in involved (i.e. possible over deduction in prior years, funding balances, etc.).

What have other out there done?

Gratzi!

Prior to us taking over a 401k plan, the employer paid the IRS directly from her own funds the 20% withholding amounts that were withheld within the plan from multiple accounts cashed out from the plan one year. Rather than asking why, we just wanna figure out how to reconcile the amount that is now stuck in the plan but does not apparently belong to any participants anymore and would seemingly be reimbursable to the owner. Not comfortable paying this to her but dont really know what to do.

Can anyone tell me if it is necessary to separately track contribution types in a Solo(K)? I'm referring to separately tracking employee deferrals vs. employer profit sharing contributions vs. rollovers from other plans. I'm not referring to Roth vs. regular contributions - which obviously would need to be tracked separately. I am firing up a Solo(K) for myself and am trying to determine if I should hire a TPA to do the administration. I can handle the 5500 reporting, but not sure I want to bother with tracking contribution types on an ongoing basis. I don't believe the 5500 requires reporting which money types are in the plan, other than the breakdown of the current year contribution. Seems to me then that once the money is in the Solo(K) plan it's source shouldn't really matter. Is this a correct assumption?

Thanks for any help!

Matt

http://www.irs.gov/pub/irs-drop/rp-14-28.pdf

I have a Safe Harbor 401(k) Plan where the principals are looking to use their money for a real estate investment. Generally I would have no issue with this, but the plan for the property is to use it as a retreat to send clients.

Anyone have any experience with this type of thing? Would it be allowed, in theory?

Thanks in advance!

We are a privately held S-Corporation based out of Illinois. Our Board of Directors each have a benefit package that are outrageous which no other employee receives. Beside the benefits they now have set up a SAR for the Board of Directors. Is there anything that we as employees can do to modify or eliminate some of the benefits and the SAR?

I just got a question from a colleague of mine asking if I knew the default tax withholding on an ADP refund from a Puerto Rico qualified plan. My recollection was that 10% withholding is correct on virtually all distributions from a Puerto Rico plan (except for certain lump sum distributions). Can anyone confirm this? Does anyone have a cite?

Thanks in advance.

Medical practice has a deferred compensation plan. When a Dr. leaves the practice they are entitled to a deferred compensation payment which is almost entirely derived from the collection of receivables.

Is this payment for services rendered (subject of course to 2.5 months/last day of plan year) or ineligible deferred compensation, because it only becomes payable after severance from employment?

Or is the answer, you really need to dig into the particulars of the contract? This must come up often, so I'm hoping someone can offer a rule of thumb!

Hi,

An employer deposited more money than necessary into the plan for a profit sharing contribution, and then decided to simply take the money out of the plan. It was money in the holding account, and had not been allocated to the participants. However, it still shouldn't have come out of the plan. Does anyone know what the penalty is for this?

Thanks!

Employer had signed a directive for the 2012 plan year to contribute $70,000. Due to confusion about $30,000 in salary deferral contributions, only $40,000 was made in 2013.

Can the company make the $30,000 now in 2014 and still count it for the 2012 plan year? Assume the plan document does not have any language that otherwise indicates when a contribution must be made for the plan year. For example, it does not state that the contribution must be made by the due date of the employer's tax year.

The allocations will be considered part of the 2014 limitation year so will not exceed the 2014 maximum limitations.

I know that the amount deductible for 2012 is only $40,000. But I don't see anything that prevents this from being allocated to the 2012 plan year as long as the 2014 deduction and 415 limits are not being exceeded otherwise.

Thanks,

Craig Schiller

Ladies and Gentlemen, here is the Northern Cali solution by the Blues to a nationwide problem:

The healthcare client whose employees are immediately subject to the individual mandate is offered a choice between a High ($3,000 max per member) Dental PPO (90%/60%) and a Low ($1,500 max per member)Dental PPO (80%/50%). In addition, a choice of Pediatric Dental PPOs is offered to subscribers and dependents under age 19 with the proviso that one of the Pediatric Dental PPO options must be elected by the employer.

Hence, members and subscribers under age 19 have two premiums offered, one of which (the Pediatric Dental PPO) must be selected and paid in order to satisfy the individual (and ultimately employer) mandate.

Does anybody (certainly not the regulators nor Speaker Pelosi) have a simpler solution?

Regards,

Ira

P.S. The same situation applies to the essential vision benefit. Trust me, the Delta Dentals and VSPs of the world won't touch these issues with a 10' pole.

3 years ago, I had a DRO for a municipal gov't deferred compensation plan approved by the plan administrator. For whatever reason, my ex refused to agree to it. Now he is agreeable, but the plan administrator told me there may not be enough to cover my share after the gains/losses are figured in because my ex's child support obligation was paid from it. She even went so far as to blame me that the child support was coming from his deferred comp account and that I shouldn't have waited this long!. When I asked her if she knew this for sure if there would be a deficiency, she said she didn't know and that the record keeper would not continue to figure gains/losses if there were no funds left in the account, so we may not know the total of my marital share of his account. It was all speculation on her part. She wants me to add a provision to the DRO that if there isn't enough to cover the lump sum plus gains/losses, that my share would be 100% of the fund. That means that she is trying to get me to take less than what is stated in my stip. just because my ex's child support obligation had reduced the amount in his fund. Also, my stip would have to be amended to include this provision. Anyone have any ideas what I should I do?

Seeking advice. In 2013, I received W2 severance from past employer. Also received 1099-MISC consulting income via my 1-person LLC.

Am I able to set up and contribute to a SEP IRA from my 1099 income as per IRS Pub 560, or does my W2 severance income affect situation.

Thank you in advance!