austin3515

As "mistakes" go, this to me seems to be one of the most potentialy dangerous since the consequence of failure to comply is a $10K audit, not to mention all of the client's time involved.

But with respect to the small plan audit waiver, employer securities are not subject to the additional bonding requirements.

These things are so rarely the auditors fault. Much more likely the austior was hired last week b/c the client procrastinated... I don;t know what the status will be but it will be considred filed, and you'll need to do an amendmed. Personally, I've never understood why so many prominent people suggest this course, when the administrator is signing under penalty of perjury that the report is complete.

Bird, you do get it... As for the people doing the math, often times the owner is the one to do the math before handing it out. The employees know there is just one owner. And I don't think it's too cavalier to add them together as we are at least addressign the requirement, without providing any insight at all into the disparity in the accounts.

Small plan, where owner has $500K with a financial advisor, and the employees have their money with a recordkeeper (perhaps Asensus). Because the money is actually held by someone other than asensus, they are subject to the small plan audit waiver disclosures. 1) Does everyone agree with me so far? 2) Let's say the SAR says plan assets are $1Million. You disclose that trust company ABC is holding $500K. How are people handling the fact that a little simple math can be revealing regarding the owner's balances? OR perhaps people will question, "where is the rest of my money?". We've done two things in the past: 1) We've added the two pockets of money together and said "ABC Trust Company and Pershing" and then put the total investmetns held, toghether. 2) Concluded that getting a statement from Asensus is so close to being an individual account plan that it's probably OK and skipped the disclosure (as I'm sure thousands of plans do simply because they haven't put as much thought into this as I have!

The 2008 form, as long as you do it before 10/15.

The 415 limit comes to mind, but otherwise no. With respect to the 415 limit, as long as everyone getting the QNEC has enough 2010 compensation you should be OK (of course, they were all still active, so probably they do).

http://sungard.com/sitecore/content/campai...o403bplans.aspx Very very relevant article on mandatory contributionsby Steve Forbes... Beginning of excerpt Some 403(b) plans provide for mandatory contributions. In this situation, making the contribution is a condition of employment. Such a condition may arise from a statute or contract, or may simply be the employer’s policy. Both of these types of contributions reduce the employee’s wages for tax purposes. The FICA rules count these contributions as wages. However, neither type of contribution is an elective deferral for purposes of a 403(b) plan under Treas. Reg. §31.3121(a)(5)-2, which the Treasury finalized in November 2007. Accordingly, these contributions are nonelective employer contributions as far as the plan is concerned. Except for church plans and governmental plans, these contributions are subject to nondiscrimination testing under Code §401(a)(4). They are not subject to the universal availability rule (and cannot be used to satisfy that rule) or the 402(g) limit. Unlike conventional elective deferrals, these contributions are not included in gross compensation for purposes of 415 or other Code provisions which reference the 415 definition of compensation. End of excerpt I have a plan where the employer mandates a 5% employee contribution. If you make said 5% contribution, you get an 8% contribtion. Question is, 8% of what? This article seems to suggest that it is 8% of comp EXCLUDING mandatory contributions unless unique language adding back the mandatory contriubtions is included.

From researching the 415 rules applicable to 403b's, I've looked at the regs and the IRS Pub 571. The regs seem to make it clear that the employer cannot provide a benefit in excess of the 415 limits (i.e., the test is an employer level test, based on the plan year). But in pub 571, it seems to indicate that in addition to a "plan year" review by the employer, the employee also needs to run their own test based on their own taxable year. Am I understanding this correctly? Woluld this mean that as a TPA we should be reviewing calendar year data (even for fiscal year plans) to ensure compliance? The test is actually quite complicated as I'm learning. It's complicated because of the definition of includible compensation, which could include comp from up to several years ago. It would seem to allow someone to go well over a qualified plan's normal 100% of comp limit, unless I'm missing something. Does everyone agree? Has anyone seen a practical user friendly write up of these rules?

Sounds like a conspiracy theory...

http://sungard.com/sitecore/content/campai...o403bplans.aspx Very very relevant article on mandatory contributionsby Steve Forbes... Some 403(b) plans provide for mandatory contributions. In this situation, making the contribution is a condition of employment. Such a condition may arise from a statute or contract, or may simply be the employer’s policy. Both of these types of contributions reduce the employee’s wages for tax purposes. The FICA rules count these contributions as wages. However, neither type of contribution is an elective deferral for purposes of a 403(b) plan under Treas. Reg. §31.3121(a)(5)-2, which the Treasury finalized in November 2007. Accordingly, these contributions are nonelective employer contributions as far as the plan is concerned. Except for church plans and governmental plans, these contributions are subject to nondiscrimination testing under Code §401(a)(4). They are not subject to the universal availability rule (and cannot be used to satisfy that rule) or the 402(g) limit. Unlike conventional elective deferrals, these contributions are not included in gross compensation for purposes of 415 or other Code provisions which reference the 415 definition of compensation.

Does anyone feel that they are getting an unusual number of 2007 Late 5500 Notices? Or is it just that the IRS has sent out a ton of them in the last couple of months?

Sieve, if these are common law employees, the leased employee rules don't even apply. What you're referring to (For example) would be if a company decided to outsource it's IT department to a company that provides that type of service (which is fairly common, from what I understand) where they transferred some of their former common law employees to the IT outsourcing company. The IT department at the recipient is staffed with the IT Consutling companies employees (who used to work directly for the recipient). The "Consultants" working on-site would be leased employees. Therefore, I don't think your analysis applies here - do you agree?

My understanding of how these arrangements usually work is that they are really just outsourcing the payroll/benefits function. Again, the ability to hire and fire remains with the doctor, and I have always been told that is a pretty darn good rule to apply when determining common law status. In the situaiton I am desparately trying to communicate, such is the case. The Doctor: Sets the pay rate Hires & Fires Tells you when to come in, what time you can go home, and how to do your job. I don't what other criteria anyone can point to that would suggest that these might not be the common law employees of the medical practice. To me, it is as obvious as 2+2 = 4. And this is my understanding of how a PEO arrangement usually works, which is why the IRS came out several years ago mandating the multiple employer approach.

The medical practice??? Am I the only person who thinks you can't pay someone to take over your role as the Employer for ERISA purposes? Hey, why not put just your employees in ADP total source, and that way the Doc can have his own plan, where he can max out and not give his employees a dime! That will pay for ADP's fees!! What a great design! But of course we all know if it sounds too good to be true it usually is...

I suppose I could more appropriately label it as a PEO. But they are definitely on the payroll tax returns of a 3rd party, which of course is an important distinction from a payroll provider.

Except that the leased employee rules do not apply to COMMON LAW EMPLOYEES. Not really yelling, I'm actually laughing out loud because I sound like a broken record

Small medical practice A has no patience, desire, time, etc. to worry about paryoll, employee benefits, etc. Plus, they are a small company so can't get good rates. Solution: Have your employees transfer over to a leasing company, like ADP total source. That doesn't mean that you have no employees for really any purpose I can think of, and certainly not ERISA. The Dr. can hire, fire at will. So they are the common law employees of the person they work for... Please someone else chime in here and make everyone agree with me!!!

It does involve deferrals.

"There doesn't appear to be any reason you can't terminate the plan and transfer assets to the leasing company's plan." So maybe wer're saying the same thing. I agree that if we do the nonelective transfers to the leasing plan, we can terminate the old plan. But people can't roll to IRA's or cash out, etc. - do you agree with that?

Because the employees are still the common law employees of the same company, so there is no "severance of employment."

1) All employees switch from payroll of the employer to the payroll of the leasing company. 2) They now participate in that employer's multiple employer plan 3) No break-in-service, so we can't pay people out 4) Can't terminate because of the existence of a replacement plan. So what do we do? 1) Merger to multiple employer plan (seems unlikely)? 2) Nonelective transfers to new plan and then plan termination of old plan. Have never really used nonelective transfers, but I'm pretty sure they would apply hear

I would say the LP is out (unless it's traded on an exchange, which I think some are?). I think personally, I would conclude that the life insurance policy qualifies. The FMV should be the Cash Surrender Value. Doesn't seem to be too much of a stretch to me...

Thanks Bird! Anything you can provide in the way support would be greatly appreciated. Was this part of a Q&A or something? Or is my interpretation of 1402(a)(13) on the money?

I THOUGHT it was pretty clear that the earned income for a limited partner was calculated solely by taking into account their Guaranteed Payments, based on 1402(a)(13). But the question I am now struggling with is that in spite of this exception, do I still need to reduce their comp by their own employer contribution (eg, ps contributions allocable to their own account)? 1402(a)(13) says they can disregard the distributive share of the income of the partnership, but their own contriubtions would not have been deducted on their anyway, so I'm not sure they fit into the exclusion?