austin3515

I'm sorry masteff, but is that a slam dunk that it is a fringe benefit? Your first and last sentences seem to suggest that - but in the middle you lost me. In your second sentence, you seem to argue that it's because it is the same as the 20% portion from my example, but to me, the 20% piece would NOT be a fringe benefit. I presume you agree, so perhaps you could clarify?

I think I've got it now!! So, I'm an employee. My empoloyer pays 80% of my benefits if I elect to have health insurance. Let's focus just on the 20% part of the CODA. If I opt out of benefits, clearly the 20% increase in my paycheck is NOT a fringe benefit that would be xclued. So your position is that the additional income my employer gives me (in addition to simply not deducting the 20%) would also not be a fringe benefit. I think that is what your case is, correct? Are you however in agreement that there is a fair amount of judgment involved? I think your logic regarding "Not based at all services performed" strongly suggests it would be a fringe benefit. Furthermore, the fact that this "benefit" is incorporated into the Sect 125 SPD (which is in and of itself a fringe benefit) further suggests this. What's more, the IRS IRM explicity says that a Cafeteria plan is a fringe benefit/. Based on this last point, if it is a benefit provided under a cafeteria plan, I have to say I'm almost 100% convinced that opt out benefits fall into the fringe benefit column...

But doesn't opt out benefit fit into that? i.e., no correlation between lowest paid and higest paid employee, not dependent on job classification, etc. TAG Gave me the following: IRM 4.23.5.11 (11-03-2009) Fringe Benefits 1. A fringe benefit is any cash, property, or service that an employee receives in addition to regular taxable wages. IRC § 61 states that, except as otherwise provided, gross income means all income from whatever source derived, including but not limited to, compensation for services including fees, commissions, fringe benefits, and similar items. Consequently, a fringe benefit provided by an employer to an employee is presumed to be income to the employee unless it is specifically excluded from gross income by another section of the Code. See Treas. Regs. § 1.61-21(a). 2. Publication 15-B, Employer's Tax Guide to Fringe Benefits, may be used for quick research on the treatment of certain fringe benefits. However, the Code, regulations, revenue rulings, and court decisions are the authority for any proposed issues. 3. The following non-exhaustive list provides examples of fringe benefits: Automobile allowances Awards and prizes Back pay awards Bonuses Cafeteria plans Chauffeur services Communications equipment (such as cell phones) Company owned or leased aircraft Company owned or leased vehicles Country club memberships Dependent care assistance programs Disability payments Discounts on property or services Educational reimbursements Executive dining rooms Estate planning Financial counseling Free or subsidized lodging Golden parachute payments Group term life insurance Home security systems Income tax return preparation Legal services Loans (low interest or interest-free) Low interest loans Local transportation for commuting Meals or meal money/allowances Moving expense reimbursements Outplacement services Parking Personal computers allowed to be used at home Personal liability insurance Physical examinations Reimbursement of expenses on the sale of a personal residence Safety awards Severance pay Scholarships and fellowships Sick pay Spousal travel Stock options Travel reimbursement Use of vacation homes Vacations (all expense paid or discounted) 　 IRM 4.23.5.11.1 (11-03-2009) Statutory Exclusions from Gross Income 1. After a fringe benefit is identified, it is necessary to determine whether there is a statutory provision that specifically excludes it from gross income. The Code excludes the following fringe benefits from income: A. Employee achievement awards (IRC 74©) B. Group-term life insurance (IRC 79) C. Amounts received under accident or health plans (IRC 105) D. Contributions by an employer to an accident or health plan (IRC 106) E. Rental value of parsonages (IRC 107) F. Certain combat pay of members of the armed forces (IRC 112) G. Qualified tuition reduction (IRC 117(d)) H. Meals or lodging furnished for the convenience of the employer (IRC 119) I. Cafeteria plans (IRC 125) J. Educational assistance program (IRC 127) K. Dependent care assistance (IRC 129) L. Certain fringe benefits (IRC 132) M. Certain qualified military benefits (IRC 134) 　 IRM 4.23.5.11.2 (11-03-2009) Fringe Benefits under IRC Section 132 and Definitions 1. IRC 132(a) provides that gross income shall not include any fringe benefit that qualifies as one of the following: A. No-additional-cost service, B. Qualified employee discount, C. Working condition fringe, D. De minimis fringe, E. Qualified transportation fringe, F. Qualified moving expense reimbursement, G. Qualified retirement planning services, or H. Qualified military base realignment and closure fringe. 　 　 　 From (2009) IRS Publication No. 15-B, 1. Fringe Benefit Overview: This section discusses the exclusion rules for the following fringe benefits. Accident and health benefits. Achievement awards. Adoption assistance. Athletic facilities. De minimis (minimal) benefits. Dependent care assistance. Educational assistance. Employee discounts. Employee stock options. Group-term life insurance coverage. Health savings accounts (HSAs). Lodging on your business premises. Meals. Moving expense reimbursements. No-additional-cost services. Retirement planning services. Transportation (commuting) benefits. Tuition reduction. Working condition benefits. 　 §1.61-21. Taxation of fringe benefits (a) Fringe benefits (1) In general. —Section 61(a)(1) provides that, except as otherwise provided in subtitle A of the Internal Revenue Code of 1986, gross income includes compensation for services, including fees, commissions, fringe benefits, and similar items. For an outline of the regulations under this section relating to fringe benefits, see paragraph (a)(7) of this section. Examples of fringe benefits include: an employer-provided automobile, a flight on an employer-provided aircraft, an employer-provided free or discounted commercial airline flight, an employer-provided vacation, an employer-provided discount on property or services, an employer-provided membership in a country club or other social club, and an employer-provided ticket to an entertainment or sporting event. (2) Fringe benefits excluded from income. —To the extent that a particular fringe benefit is specifically excluded from gross income pursuant to another section of subtitle A of the Internal Revenue Code of 1986, that section shall govern the treatment of that fringe benefit. Thus, if the requirements of the governing section are satisfied, the fringe benefits may be excludable from gross income. Examples of excludable fringe benefits include qualified tuition reductions provided to an employee (section 117(d)); meals or lodging furnished to an employee for the convenience of the employer (section 119); benefits provided under a dependent care assistance program (section 129); and no-additional-cost services, qualified employee discounts, working condition fringes, and de minimis fringes (section 132).

But the key question is what are those considerations?? Just voicing my frustrations, that is all. I do appreciate your responses!!!

do you agree tha the car allowance is a fringe benefit? The point of the analogy is to show that just b/c a beenfit is paid in cash, that doesn't automatically make it not a fringe benefit. Plus, I must admit, since fringe benefits is such a common exlcusion from comp, it seemes that it ought to be documented very well somewhere whether or not common thisngs such as these fall into the defintion of fringe. The IRS has publication 15B which seems to cover a lot, but does not seem to be an exhaustive list of all the fringe benefits that might exist.

Client has a Section 125 plan document that basically indicates basically this: You get a bonus of $1,000 a year if you opt out of employer paid health insurance benefits. My position is that this compensation could be considered a fringe benefit as it is a component of the health insurance plan. It's all part of the health insurance fringe benefit. I'm looking at our document and simply idnciates that "fringe benefits" are excluded (i.e., lower case f and b, with no elaboration on what that means...). Is there a definition of fringe benefits out there that might be relied upon? Or does the fact that it is cash make it, by definition, NOT a fringe benefit. What about a non-accountable car allowance that some companies pay to their salesman? I've always that was a fringe benefit.

What a gem...

I hear what you're saying, but I was hoping for something concrete... Until I get that, there will always be this nagging thing about "why can't I do this??." But I hear you, and since universally NO ONE thinks this is a good idea, far be it from me to go down this perilous path; but if you can button this down for me with a reg that says I can't do it, that would be AWESOME~

- prototype documetns require reasonable classification (don;'t get me started, I wish we had done the VS doc).. But also, in my example, the comp from 2009 for the owners was MUCH higher, so thet esting won't work out so good if I cannot use the 2009 comp for testing.

I would think it would have to be the year DEPOSTED since the original grace period was missed. What's the basis for calling it 2010? And most importantly, what's your basis for suggesting that it must be allocated in the same year for which it is counted for 415 purposes? IF there is a direct answer to that question, no one will be happier than me, as I've been frustrated by this question for a long time!

They want to fund the numbers we ran for them in September 2010. We esent them the resolution because it was new comp, which I assume was executed, so you've raised a very interesting avenue... But aside from all that, do you agree that I can use 2009 comp for testing? Everyone seems to be tying the answer to deduction limits and 415 limits, but both of those rules are not on point with my primary question. At least not in my opinion...

Why would the document say allocations are on current year pay? We're always at least one year behind. And I;ve never seen allocation reference today's date in determining what compensation will be?

Client (calendar year plan) never funded their 2009 profit sharing contribution that we had calculated, but they want to (they had much higher compensation that year, and now they have plenty of money in the bank and want to put as much of that as possible towards retirement). In this case, there are no 415 issues for anyone involved (they all have plenty of comp in 2010 and will also in 2011). I am also aware that they client probalby needs to am,end their 2009 tax return, and this contribution, if made will need to be deducted in 2011 (so I need to be careful about how I treat the 2011 contribution for max deductible issues). -Is anything stopping me from allocating profit sharing contributions today based on 2009 compensation and using 2009 compensation for cross testing? -I know the contriubtions will be deductible in 2011 (right?) -I assume they will also be subject to the 2011 415 limits,. Lots of other things have specific dates, but there is not one that I am aware of that relates to when a contriubtion must be made to be included in rate group testing for a particular year. Can anyone point me to reg that says I can't do this?

Before 2009, were they required? There was obviously NO information on them. Talking about an ERISA Plan of course.

YUou must have the opportunity to receive the money in cash to be able to make a 401k election, so if you had the opportunity to receive it in cash, you would then have a cash ord eferred arrangement which, requires a Section 125 plan. Absent a 125 plan, a portion of EVERYONE's premiums would be taxable (or so goes my interpretation of what Robyn said). My big question is, must this all be in the form of a written section 125 plan document?

Take a look at K Jiohnson's link, but I submitted to TAG and they indicated that this is NOT considered a fringe benefit, and therefore it is part of compensation unless specifically excluded by the document.

So does this mean that as long as there is a 125 plan, employers can pay people to opt out of benefits? Does the opt out arrangement need to be outlined in the plan? For example, as part of the 125 plan, must the employer simply say something like "If you opt out of coverage we will pay you 50% of whatever your premiums otherwise would have been"?

Employer pays 100% of employee health insurance. If the Ee opts out of health insurance (let's say they are covered by their spouse's plan), employer will pay them additioinal compensation equal to 50% of what the premiums would have been. 1) I assume this is totally and completely unrelated to the deemed 125 compensation issue, correct? 2) Can these opt out benefits be considered a fringe benefit, and therefore excluded along with all other fringe benefits (assuming the document excludes fringe benefits). (I think yes, but let me know!). I just wasn't sure if there was a technical definition of fringe benefits.

The IRS blessed ENTRY dates, not eligiblity periods. Point of clarification Question: Are entry dates in a 403(b) plan permitted, or does entry have to be immediate upon date of hire for deferral purposes under the universal availability rules? It is possible to interpret Treas. Reg. § 1.403(b)-5(b) as allowing entry dates? Reg §1.403(b)-5(b) provides "A section 403(b) plan satisfies the effective opportunity requirement of this paragraph (b)(2) only, if, at least once during each plan year, the plan provides an employee with an effective opportunity to make (or change) a cash or deferred election...". Is this an annual entry date, or more of an annual notice requirement? Answer: The 403(b) statute does not have specific rules to accommodate entry date requirements, but it is reasonable to have entry dates to make it administratively feasible. So, monthly entry dates work, maybe quarterly, but probably not semi-annually.

In reading TIAA's Auditor FAQ's, they indicate that many plan sponsors have concluded that terminated participants with balances may be excluded from the participant counts (and therefore line 6c on the 5500) based on the instructions for line 6c, which says you may exclude anyone whose benefit is guaranteed by the insurance, company etc. Has anyone been using this position? TIAA's write up is at the bottom of page 9 of the attached document. The crux of it is this: After a participant separates from service, the employer generally has no obligation to make further contributions and will not control when the participant receives distributions. Instead, the terminated employee will exercise his or her own rights under the terms of the TIAA and/or CREF annuity contracts. In effect, the separated participant is in the same situation as if he or she had received an in-kind distribution of an annuity contract from a trusteed pension plan. Since this is the case, a number of employers take the position that a participant who has separated from service is no longer a plan participant. Since there is no guidance from the Department of Labor to the contrary on this point, we believe that excluding separated participants is an acceptable approach. Note, however, that if the separated participant has account balances in mutual funds under a trust or custodial account, the employer cannot take this position and must treat the separated participant as a plan participant. The instructions to the 2009 Form 5500 indicate that the “other retired or separated participants entitled to future benefits” category does not include any individual to whom an insurance company has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan. tiaa_cref_faq__s.pdf

They referred specifically to the DFVC Number provioded when the applicaction was approved, so I don't think that would be it.

You're saying that because they need to have an opportunity to defer the max under universal availabiltiy? Every prototype I've ever seen (ok, so it's only 2 - TIAA and Corbel) gives you the choice of whether or not to include it.

I apologize, but I cannot tell if your suggesting it is the participant's or the employer's responsibility? It's your parenthetical note that seemed to throw me off...

Who is responsible for figuring the amount of someone's eligible catch-ups in a 403b? The participant or the employer? The IRS publication 571 appears to be worded such that it is the participants responsiblity. So need the employer simply get representation from the employee?

We received correspondence from the IRS where they are asking for our DFVC Number that was given when the DFVC was applied for and approved. Anyone know where/when you get this number?