austin3515

http://www.irs.gov/pub/irs-pdf/p4220.pdf While Your Application is Pending While an organization’s Form 1023 is waiting for approval from the IRS, the organization may operate as a tax-exempt organization. If an annual exempt organization return is due, the organization must file it, indicating that its application is pending. These returns are subject to public disclosure. If the organization has un-related business income of more than $1,000, it must also file a Form 990-T. See Publication 4221-PC or 4221-PF for more information. Although donors have no assurance that contributions are tax-deductible for federal income tax purposes until the application is approved, contributions made while an application is pending would qualify if the application is approved. However, if the application is disallowed, contributions would not qualify. Moreover, the organization would be liable for filing federal income tax returns unless its income is otherwise excluded from federal taxation. The EO website (www.irs.gov/eo) provides information about how to find out about the status of an application for tax-exempt status.

http://www.irs.gov/pub/irs-pdf/p557.pdf See page 6, Effective Date of Exemption (there was a link to this in the IRS Q&A sited above).

That;s awesome, but if anyone has the reg that would be perfect.

I can't seem to track down where it says "filing" is a requirement to be a 501c3? I didn't do an exhaustive search, because I figured you might know off the top of your head,.

That's good enough for me actually. If fling is the only requirement, they have done that. In other words, you are until they tell you your not. Sort of like submitting a 401k plan for a determination letter perhaps - you're a qualified plan unless they tell you aren't. The law says what it says, and it says "filing" is required to be a 501c3. I'm sure you still need to comply with all rules relative to a 501c3, of which a filing is only one of those requirements. I assume that this is to protect people from waiting and waiting and waiting for the IRS to respond.

But not yet approved by the IRS, although it is more or less "guaranteed" it will be approved. Can they start a 403b before the application is approved? [They receive state grants to provide services to the mentally disabled.] Any citations appreciated. I have it on good authority that this is doable, but that individual (an ERISA attorney) couldn't recall where he had obtained this response.

http://www.dol.gov/ebsa/faqs/faq-sch-C-supplement.html Question 13 is directly on point.

$100M plan gets back $50,000 in revenue sharing and it's put into an ERISA Recapture Account to play pan expenses. Auditor fee is $25,000. If the auditor fee is paid from this recapture account, is this indirect compensation? The implications of course are: -408b2 reporting requirements -Schedule C reporting (as indirect as opposed to direct). Any guidance or articles from the IRS or the "big" names (Reliusu, McKay, Reish, etc) would be great! Thanks,

Yes, mine is a DC Plan. Thanks!

You do not have to have a substantial risk of forfeiture to qualify for 409A. It's just that if you don't comply with 409A, you're subject to taxes and a 20% penalty on anything that is not subject to a substantial risk of forfeiture. I'm reading through the regs now. I assume everyone agrees that if 100% vested with no substantial risk of forfeiture that FICA taxes apply?

But in what scenario do you have to run the calculations you describe? I don't think my plan has any vesting schedule at all, but someone above is saying there must be a substantial risk of forfeiture to qualify under 409A and to avoid to avoid depositing payroll taxes. Thoughts?

You and me both...

My understanding is that because they can't take the money it is not FEDERAL taxable income ("constructive receipt"). But because it is vested, it is subject to Medicare and SS.

Employer contributions made to the Plan to make up for qualified plan limits. Contributions are 100% vested. If the contribution is $10,000 is it necessary to run $10,000 through payroll in order to pay the necessary FICA (but not Federal/State) income taxes?

I agree 100%. They did not provide a cite, but I will ask for one, now that you mention it.

TAG wrote me back and informed me that DFVC is not even available if the form was already filed. I swear I have used DFVC in these situations after the form was filed, upon receipt of an IRS late notice (i.e., if no extension was filed). It seems like others have used this as well. Andy, this is another option that is being considered as well, thank you for the suggestion!

Malpractice seems a bit dramatic. We have our reasons, including completely data entering the entire form all over again (audited plan) because it was done by a prior recordkeeper who has proved uncooperative. Anyone asked this question of the DOL or at a Q&A? It just seems to me that this should just not be necessary. But I'm asking, so I should credit for that!

Form 5500 filed a year late but did NOT do DFVC. IRS sends letter with penalty notice for late filing. So we're suggesting DFVC program. The question is, do you have to amend the 5500 to check the DFVC box in this situation? I say no, because it seems to me the point of the box is to avoid getting the letter we already got. Appreciate any thoughts.

Asked and answered: 26 C.F.R. § 1.402©-2 Q-7: When is a distribution from a plan a required minimum distribution under section 401(a)(9) ? A-7: (a) General rule. Except as provided in paragraphs (b) and © of this Q&A, if a minimum distribution is required for a calendar year, the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9), to the extent that the total required minimum distribution under section 401(a)(9) for the calendar year has not been satisfied. Accordingly, these amounts are not eligible rollover distributions. For example, if an employee is required under section 401(a)(9) to receive a required minimum distribution for a calendar year of $5,000 and the employee receives a total of $7,200 in that year, the first $5,000 distributed will be treated as the required minimum distribution and will not be an eligible rollover distribution and the remaining $2,200 will be an eligible rollover distribution if it otherwise qualifies. If the total section 401(a)(9) required minimum distribution for a calendar year is not distributed in that calendar year (e.g., when the distribution for the calendar year in which the employee reaches age 70 1/2 is made on the following April 1), the amount that was required but not distributed is added to the amount required to be distributed for the next calendar year in determining the portion of any distribution in the next calendar year that is a required minimum distribution. (b) Distribution before age 70 Any amount that is paid before January 1 of the year in which the employee attains (or would have attained) age 70 1/2 will not be treated as required under section 401(a)(9) and, thus, is an eligible rollover distribution if it otherwise qualifies. http://www.law.cornell.edu/cfr/text/26/1.402©-2

Can someone point me to the reg where it makes it clear that a participant who terminates in the year in which they attain 70.5 or later, must take their RMD before a rollover? I'm looking for that golden nugget that makes it crystal clear that the RMD is not eligible for rollover. I was looking in the RMD rules, but perhaps it is in the definition of eligible rollover distribution? We have a situation where the participant terminates before they turned 70.5 and of course they are questioning our conclusion that it is required.

Take a look at this article in connection with TIAA's letter. I think it's pretty relevant. http://reaction.dbr.com/rs/vm.ashx?ct=24F76A1BD3AE4EE0CDD889ADD625941891907ABFDA9818CF5AE175767CEAC80BDF418

OMG. You've got to read this. I'm not even a plan sponsor and I'm offended by this! http://opssupport.tiaa-cref.org/EC/GetFile.aspx?&ECID=RJc3IF5nf

Are there any investment restrictions regarding how a 457b for a tax exempt organization can be invested? This plan covers just the CEO. For example, can they invest in stocks, bonds, ETF's etc, or does it have to be exclusively mutual funds or insurance products, etc. Any sites you can provide regarding restrictions would be very helpful.

Anyone have a checklist they run through when processing plan amendments? For example, cut-back issues, BR&F issues, audit concenrs (if liberalizing eligibility)

I was just told by GW that they insist on a trustee regardless. I wouldn't be surprised if many of the others have the same policy.