austin3515

From Bank of America's Website: "With at least $10,000 and a 12-month commitment, you can earn a steady 0.07% for the term with our Featured CD."

Given the fact that it includes the word "guaranteed" suggests that you are giving up risk and giving up return. I am with you 100%. What I am more mystified by is that there is not more being written out there about what this means for a ubiquitous investment product.

http://www.great-westclassaction.com/frequently-asked-questions.aspx#a1 Just curious what other people are telling their clients who are getting these letters. I assume those of you who work with Empower are getting these. It's a class action suit surrounding their Key Guar. Portfolio fund (i.e.,. their guaranteed interest fund). From what I have read, the impact of this suit could be wide reaching. It is essentially a rebuke of investment gains that exceed the crediting rate, even though of course if returns are less than the crediting rate the fund investors receive no losses (which is kind of the definition of insurance). The excess of course is compensating Empower not for the recordkeeping costs, but for the additional risk they are taking. It seems to me Empower was picked for this suit because they are the number 2 recordkeeper, and not because they are the only ones who have a product like this. I am especially curious to know if any write-ups have been done in the context of what this means for the industry as a whole. To me the implications seem vast.

"Anyone know how to to treat a "743(b)" election? It's something like depreciation. If anyone can point me to something on point I would appreciate. Trying to see if I treat it like section 179. So... Box 14A $250,000 Sect 179: 0 "743(b)" related to a step-up in basis in the acquisition of a business: $25.000.

Anyone know how to to treat a "743(b)" election? It's something like depreciation. If anyone can point me to something on point I would appreciate. Trying to see if I treat it like section 179.

They just did not explain what they meant at all. Shocking because the IRS never makes consequential statements that leave us nuts and bolts people wondering how the heck we actually implement things.

So tell me like I'm stupid - what do you think I should do? Deposit the 20% as an additional employer contribution?

"well, I guess since it is VCP you can always ask the friendly IRS folks and tell us what they say." I did - she had no idea!! I'm just going to have them put in the 20% to put an end to this. It's a relatively small amount of money.

1. Participant had a loan that should have been defaulted and taxed to the participant in 2015. Right 2. Instead, the loan was offset when participant terminated in 2016 and closed his account. For 2016, the participant was issued a 1099 showing a taxable distribution equal to the sum of his investments plus his unpaid loan.. 3. Because there were additional assets distributed when the loan was offset, 20% withholding was done on the entire taxable amount. As part of the VCP requirements, when a loan is being taxed in year of correction as opposed to year of default "any applicable income tax withholding amount that was required to be paid in connection with the failure (see § 1.72(p)-1, Q&A-15) must be paid by the employer" (2016-51 6.01(1))

In this situation, the loan should have been defaulted in 2015. We went to correct in 2016 and he then closed his account in 2016, so it was all done together at the same time.

OK, so if he rolled his money over it is moot, no correction, right? But alas, he did not, so mechanically what do I do? A deposit equal to 20% of his loan balance into his account?

Long story short, no payments were made on a loan, which should have defaulted in 2015. This was figured out in 2016. In the midst of implementing the correction, the participant terminated and opted NOT to repay any portion of the loan. 1099 was issued in 2016. The IRS is basically forcing us to use the "taxed in year of correction instead of year of default box" which sounds reasonable enough, EXCEPT that that correction requires the plan sponsor to pay for any related withholding. Does anyone know what that actually means? Does the plan sponsor make a contribution equal to the withholding to the participant's account? If the participant rolled over their account, there is no withholding. Is plan sponsor off the hook?

Our decision so far has been not to take advantage of this. I'm sure the IRS in 5 years will come to the realization that the fox cannot be trusted to guard the henhouse.

Why, because it's less work of course :)

Well this "memo" was written by the IRS. I think the huge gaping hole in this system is that the participant is required to keep the documentation. That is just a hilarious assumption.

Is anyone making the shift to self-certification? Has anyone spoken with auditors about this (I mean CPA auditors)? http://benefitsbryancave.com/irs-views-on-self-certification-of-financial-hardship/

I found the answer I was looking for. Apparently absent ERPA you can only represent with respect to examinations of a form you prepared. Also, signing 5330/945's are two other things I thought of. Definitely means no VCP's. https://www.irs.gov/pub/irs-pdf/i2848.pdf Limited representation rights. Unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable period covered by the tax return they prepared and signed (or prepared if there is no signature space on the form). Unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, attorneys from the Office of Chief Counsel, or similar officers or employees of the Internal Revenue Service or the Department of Treasury. Unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer.

But I can get a POA if I merely prepare the 5500, irrespective of ERPA status. I think that's where I am looking for the delineation of can/cannots.

What exactly is it that I can only do if I am in ERPA? Can I do a VCP for a plan where I prepare the 5500?

I'm going to need to beef my own up. I've done a lot with Access so I might do an Access program. Very interesting... I like the idea of the marketing tool as well. Thanks!

Wow. They've gotta fix this stupid test. People making $130K do not have the resources to make up for that sort of deficit. That is insane. I will say that the 50% rate is probably too high for the lower paid HCE's. And someone in a bracket high enough to pay 50% taxes is probably going to be just fine. I have also dabbled in spreadsheets like what you have done, but I just am surprised that there is not a website that compares and contrasts pre-tax/post-tax options.

Well, but would you agree that because a) LT capital gains are not much; b) you're 401k will be taxed as an ordinariy income when withdrawn, that the difference probably is not as significant as you might expect? And that probably goes double if you can pay the taxes out of "excess" cash flow (as you might for example replace an oil burner in your home if it went belly up). I've had people reduced to tears over a $5,000 refund, and I want to say, hold on, this is not so bad - if you invest the refund you're not so bad off as you think...

I found the website. Is there a link to the tool you are referring to? Or is it a software you have to buy?

Has anyone ever seen an analysis done for just how detriminental ADP refunds are to an HCE's savings IF the refunds are invested after tax in a regular brokerage account? I wonder if there is even analysis that suggests if you pay all the withholding out of other assets and invest the proceeds. I'm asking because I have been lately telling people that if you invest the refund instead of spending it, you are probably not so terribly worse off. Would love to have some economic analysis to back me up on this. I am of course not suggesting that investing after-tax is better, only that the disadvantage is not drastic (but who knows, maybe it is?). Would love to see the numbers!