austin3515

OK maybe I see what you're saying - less than or EQUAL to, but the OP did not specifiy when in 2017 they began, and I'm assuming it was sometime after 1/1. I suppose if from the first pay-date in October through the first pay-date that deductions began was less than 3 months you could make the case for it.

BG, they said nothing was withheld in 2016 - 10/1/16 to 12/31/16 is 3 months. Perhaps you inadvertently subtracted 10 from 12? Or maybe I'm missing something...

Don't you have a operational failure here for not giving participants the opportunity to make 401k contributions? I certainly think so. I'm assuming the failure was longer than 3 months and as such the QNEC would be 25% of missed deferrals and 100% of the match. Interesting question is, 25% of what? Perhaps 25% of the election the ultimately made? Perhaps 25% of 3% (even though EPCRS is clear that it is based on current year activity). But 25% of zero hardly seems appropriate.

OK, but when I do my taxes I have to type in all of my Box 12 numbers, so the software WOULD know if I went over and presumably adjust accordingly. Is your position that TurboTax would not know to cap the deduction at $18,000/$24,000? I don't know one way or the other but I do find it hard to believe. If it's true, shame on them.

It's not a theory? It's what the rules are? And any tax software should do this automatically. I have never prepared a tax return other than my own, and I've never exceeded the limit, so hard to say. I do have a hard time believing a tax program would not limit each individuals 401k in accordance with 402g.

Geeze, I would just be REALLY careful that maintaining the plan itself does not blow the spousal exemption. The rule is each spouse cannot "participate in the management of such corporation at any time." I could see a picky auditor picking you apart over that. Since the stakes are high, I would not commingle anything. i.e., even if technically correct, you might be in a position where you have to prove your point. (5) Spouse An individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse (other than a spouse who is legally separated from the individual under a decree of divorce whether interlocutory or final, or a decree of separate maintenance), except in the case of a corporation with respect to which each of the following conditions is satisfied for its taxable year— (B) The individual is not a director or employee and does not participate in the management of such corporation at any time during such taxable year;

Please note that EPCRS has been re-written as Revenue Procedure 2016-51, fyi (I think original posts pre-dated its release)

What do the voluntary contributions have to do with it? After-tax contributions would only reported in Box 14, apparently on an optional basis (not box 12). But I'm with QDRO... Do not redo the W-2 if they are accurate. If a 45 year old contributed $20,000, then the W-2 should say $20,000. His or her CPA would only deduct $18,000 on their 1040 due to the cap. A $2,000 distribution must be processed by April 15th 2017 must be processed. The participant will get a 1099 in January 2018 with a code P indicating the amount is taxable in the prior year. No action is required, because the participant DID pay taxes in 2016 (i.e., because he only deducted $18,000 on his taxes).

Spirit rider, what about my follow up question?

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).