austin3515

Follow up question: Same example. The Corporation my example does a $25,000 profit sharing contribution for the business Owner. $200,000 - 25,000 = $175,000 of W-2 Comp (i.e., I had $200K total to spend, split $175 as W-2 wages and $25K as PS). So you go through the same exercise above and payroll taxes are based on a number somewhat smaller than the $175K. But if my SE Spreadsheet is correct (and I've cross-tested dozens of times) the Sole proprietorship still pays PR Taxes based on the $200K starting point. That could be a lot of extra payroll taxes, especially if you are below the wage base. I feel like this is a big deal yet I cant find any articles about it?

Am I crazy, or will a Schedule C Taxpayer pay less in Medicare Taxes than a corporation? $200,000 of profits bonused to a W-2 owner = payroll taxes of: 10,100.54 Gross: 200,000 SS Tax: (7,347) (118,500 x 6.2%) MC Tax: (2,753.54)* *200,000 - 7,347 - 2,753.54 = 189,899.46 189,899.46 x .0145 = 2,753.54 (circular calc) A Schedule C pays Medicare Taxes of 2,678.15 ($200,000 x .9235 x .0145) Correct?? I guess the IRS's point is don't overcomplicate for such a small disparity?

Belgarath, that is an obnoxious rule. One of the most obnoxious I've seen. What is the point!!

Oh that is very cool! I had actually seen that before could not get it to work the way you described. Thanks!

The significant portion test is not met. These are two unrelated businesses, except that they share some admin functions. But that is incidental to the business as a whole.

So far my best option has been drawing a red rectangle box and using up and down arrows to move it around. Only problem is that it moves relative slowly. The ruler was clever but I absolutely despise clicking because it bothers my finger.

Owner A and Owner B both sponsor a 401k plan together for their employees. There is no common ownership but there is overlap in operations for admin, financial reporting, payroll processing, etc. As it happens, Owner B is an executive with Owner A (Owner A is a very large operation, and Owner B's is much smaller, so owner B has a very significant role in the operations of Owner A's business. Owner B makes 401k contributions from the co-sponsored plan of $18,000 with respect to his compensation received from Owner A's company. Can Owner B set up a profit sharing plan and get $53,000 of proifit sharing too (testing passes taking into account all of B's employees, and that;s not really the question anyway). The profit sharing plan is NOT a multiple employer plan - only Owner B's company establishes/maintains the Plan. HEre is the regulation from 415(a)-1: e) Rules for plans maintained by more than one employer. Except as provided in §1.415(f)-1(g)(2)(i) (regarding aggregation of multiemployer plans with plans other than multiemployer plans), for purposes of applying the limitations of section 415 with respect to a participant in a plan maintained by more than one employer, benefits and contributions attributable to such participant from all of the employers maintaining the plan must be taken into account. Furthermore, in applying the limitations of section 415 with respect to a participant in such a plan, the total compensation received by the participant from all of the employers maintaining the plan is taken into account under the plan, unless the plan specifies otherwise.

What I'm looking for is an actual line that will go across the screen that I can move up and down the screen. We have landscape reports, where someone's name is on one side of the screen and their vesting years of service is on the other. A ruler on the screen (just like a ruler on paper) would make it easier to follow rows all the way across. The ruler feature in adobe doesn't go across the screen, and the grid-lines are not really lining up they way I want them to which would be too distracting.

We';re starting to go paperless and one tool I can see that I need is some sort of an on-screen ruler to scroll down through a pdf report. I have seen apps out there that do this but was wondering if anyone had a suggestion for one they have used. I'm leary of installing from some random website for security reasons.

I know -they don't include it in gross!! I think I had a client tell me about years ago, and they add it back separately now each year.

This is the 2nd client we have recently discovered that is using PayChex and they are calculating the 401 AFTER reducing wages for 125 contributions. So John's comp is $10,000 a month and $1,000 is withheld as pre-tax 125. His 401k is calced as (10,000 - 1,000) * 5% = $450. When we inquired, they checked with their "experts" who confirmed that what I described above is indeed the way it is supposed to be calculated. Obviously they are wrong, I am wondering if anyone else out there has had this problem. Ironically, I just posted in the SIMPLE boards the other day my shock and amazement that what I described above is indeed a requirement for SIMPLE IRA plans, so I presume somehow this is part of the issue with PayChex.

Mine does not have that... Frustrating...

That's what I think too, exept Corbel's document won't let me elect anything else. And yes, that's where I pulled it from. I copied and pasted if anyone else is curious. From the QACA Regs: (ii) Minimum percentage requirements—(A) Initial-period requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(A) is satisfied only if the percentage that applies for the initial period is at least 3 percent. For this purpose, the initial period begins when the employee first has contributions made pursuant to a default election under an arrangement that is intended to be a qualified automatic contribution arrangement for a plan year and ends on the last day of the following plan year. (B) Second-year requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(B) is satisfied only if the percentage that applies for the plan year immediately following the last day described in paragraph (j)(2)(ii)(A) of this section is at least 4 percent. (C) Third-year requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(C) is satisfied only if the percentage that applies for the plan year immediately following the plan year described in paragraph (j)(2)(ii)(B) of this section is at least 5 percent. (D) Later years requirement. A percentage satisfies the minimum percentage requirement of this paragraph (j)(2)(ii)(D) only if the percentage that applies for all plan years following the plan year described in paragraph (j)(2)(ii)(C) of this section is at least 6 percent.

Ah yes, if you're a safe harbor then it is a moot point! Unless of course, enrollment in the school declines, or federal funding is cut, or state funding is cut, or a recession hits and people are less generous with their charitable contributions, and if the budget otherwise needs to be balanced (and of course retirement is an easy target)... And yes of course I agree with the audit/no audit issue for those in a gray area. But hopefully Trump's administration will implement the "audit based on people with money proposal" which would drastically take that consideration out of the question (since people with less than a year tend not to contribute as often).

That and there's the whole "no rollover option" (except to another 457b of another charity, I'm sure that happens all the time..) and subject to claims of creditors thing.

How is a 457b an adequate replacement for a key executive? OK, the other option is to have the 403b covering just the HCE's but now you've got a 403b with one person (good luck finding that provider) not to mention the expense and aggravation of 2 plans. No HCE's today <> No HCE's ever. To put it more simply, with a 403b there is very little that can go wrong where you wish you had a 401k, but if you're a 401k there is a very obvious issue where you'll wish you had a 403b. So I've never had a 403b client who wished they had a 401k, but I have had multiple 401k clients who wished they had a 403b. And while there are fewer vendors, there ARE adequate vendors. And once it's an issue it's very very difficult to unravel and change course. It is more or less a permanent decision, particularly if there are any employer contributions with a vesting schedule (i.e., because termination = 100% vesting).

My opinion is why would you ever give up the ADP testing exemption. For what? There are providers out there who are quite good (American Funds RK Direct being one). "There are no HCE's today" is by no means indicative of what the lay of the land will be even in 5 years. OK, I guess if limiting participation to those with a year of service is a critical organization goal (for example if there is extreme turnover) then I guess 401k. But I have sat through to many non-profit takeovers where I had to address TESTING issues! That is just uncalled for with a non-profit.

Maybe it's time to change the Plan Year to a 3/31 :) IF that was the case you could add a safe harbor provision 4/1... That would be item (ii) in the list provided above.

Must the auto increases in a QACA take place on the first day of the Plan Year? The regulations regarding increases are worded that way, but I wonder if it is permissible to allow the increases earlier than the first day of a plan year. We're taking over a plan that added QACA 1/1/2017, with the first increase scheduled for 9/30. As such, the increases will always be a little earlier than is required by the regs.

I guess the point though is that everyone has the same access to the same match formula when taken as a whole. The allocation conditions are the same, and in fact that the discretionary match has a vesting schedule, so the benefit at the high end is arguably of lesser value anyway. Any basis for aggregating and saying, for BRF purposes, everyone gets the same dollar for dollar match? Tom, I assume you agree that a match with no cap is not subject to BRF testing?

Well, I do think a bad precedent was set here. I'll just leave it at that.

My 2 cents, I completely agree that there are scoundrels out there, and getting rid of this would be too bad. So there are multiple losers, so let's say its at least a tie for the unsuspecting participant whose going to be sold a piece of garbage annuity, and the firms that spent millions and millions to comply for nothing.

SH Match is 100% of first 4%. Discretionary match (no ACP SH) is zero on first four and dollar for dollar on the next 96% (i.e. client wants to match dollar for dollar). Assume top-heavy not an issue. Do we need to test the 2nd match for BRF because the rate of match increases as deferrals increase OR can we "aggregate" the match formulas and say that everyone gets the same match formula?

Imagine how quickly people will act the next time sweeping regulatory changes are proposed. I feel bad that a lot of MAJOR corporate decisions were made based on this rule. You had companies simply withdrawing from this industry and selling whole divisions in anticipation. So they're going to be penalized for getting ahead of the curve. https://www.insurancenewsnet.com/innarticle/1154689

I guess that explains this statement in my Basic Plan Document: Very interesting indeed...