austin3515

Well that is pretty clear I would have to agree... Worth noting that NO 403b contributions (er or ee) can be used in any qualified plan (1.410(b)-7(f)). A subtlety that might trip the unwary. This is interesting though - as I was reading your site (1.403(b)-5)I came across this in paragraph (b): "Further, the employee's right to make elective deferrals also includes the right to designate section 403(b) elective deferrals as designated Roth contributions. " Based on a literal reading, 403(b)'s are required to offer Roth, are they not?

Dug this one up from the archives... It's a little dusty, but I have the same question today. Any new developments here? I did receive an opinion from a very very top-tier ERISA attorney who concluded 403b deferrals were out but it took him 2 pages to explain why, because of course the regs are not explicit one way or the other.

It does I guess except that it doesn't reference a match in Appendix B. Anyway, I am continuing my policy of depositing as whatever match it was supposed to be.

From EPCRS: The question is, this is not a QNEC (they would have said QNEC if it was required). But it says "Employer nonelective contribution." That seems problematic because perhaps the plan does not even have a profit sharing provision. Perhaps there is a profit sharing provision, but the vesting schedule is 2/20 on that source, while the match is 100% vested. Have these questions ever been addressed?

Missed deferral opportunity QNEC is made for a participant whose deferral election was not implemented. Can the QNEC be included in the ADP Test in the year of correction?

Amen. Practically speaking: 1) watch out for terminated employees with large balances. They are in your 12/31/15 test but not 12/31/16 - i.e., you can see with clarity sometimes that the 2017 year is going to be top-heavy (I wont even charge for that tip!). 2) If plans are "almost top-heavy" ( a relative term that depends on a lot of thing) tell keys not to defer until you've done the top-heavy test. Make a big deal about it, get them on the phone, etc. This is a life sentence in terms of punishments at times and it does not fit the crime. Be vigilant!! But to your point about the officer (or perhaps 1% owner) who crept over the earnings threshold, I agree not much that can be done there. Thankfully it's never happened to me but I can see where that is nasty trapped hidden in a most clandestine manner...

Isn't that the point of different plan #'s?

Legort, no one said it was fair! This is the DUMBEST rule on the books as it is exclusively targetted to small employers, or worse, family run businesses. IT ain't fair, but it's there. Hey, I'm a poet and I didn't even realize!

So we just picked up a new plan and the prior consultants were aggregating a 403b plan and a 401k plan for the ACP test. All of the HCE's are in the 403b (and their match goes there too) and all of the NHCE's are in the 401k. So no ADP test, but we do have an ACP test. The problem is, the 403b is calendar and the 401k has a fiscal year-end. Any suggestions? The match is identical in both plans (small payroll to payroll calculations). Is this something the IRS would entertain allowing a fix for under VCP?

1065 was filed without deducting anything for profit sharing last week. Can an amended be filed "today" (before 9/15) to take an additional deduction? Or has the ship sailed?

Well, I would be surprised that if this was an option I have never seen a pre-approved document include an option to set the Employer as the Trustee in the way they do for the Plan Administrator.

It seems to me if the corp is the trustee, then by the transitive property the owners are trustees. I get that it is less paperwork, but I do not see it reducing anyone's personal liability.

1 to 2 pages is all anyone can take!

We have a one page questionnaire with questions like: Who are the owners? Do the owners own any other companies? Depending on the answers we get we ask follow up questions. We have a standard one pager asking for documentation like fidelity bonds and payroll reports. And we also have a comprehensive internal checklist that we use to make sure we don't miss anything. Call me disrespectful, but I think it is 100% unacceptable for someone receiving compensation for compliance services to ask who the Highly's are. You have or should have enough information to figure that out on your own. Certain payroll providers who shall remain nameless use 30 page questionnaires with technical definitions, etc., inquiring about controlled groups and key employees, etc. Believe me, I whip that right out when we go up against them on a proposal or if someone wants to leave us for them over fees. Works every time! My guess is that your clients are not reading your 30 page document at all or at least not very carefully. Love the Car Talk reference though I thought it was Dewey Cheetham and Howe, but I guess that was the law firm and not the insurance company....

You're not missing anything. If the union negoatiates no employer contribution because they want more money in their paychecks or because they want a more generous health plan, they are still excludable. that's what the EOB says, and Mike Preston's concise though accurate answer to the last question you asked is in agreement.

In this situation, it was a conversation we were having as I was advising regarding the implications. Thankfully they saw things clearly and are doing the right thing. But I now feel a lot better about what my own responsibilities are in these situations. Thanks everyone!

By sending the client the corrected 1099-R that is precisely what I am doing. I do not have to advise them of the consequences of not doing what I ask. I presume they will do what I instruct. "Dear client - the 1099 was inaccurate or no 1099 was filed. Please file the attached [corrected] 1099-R and prepare your amended tax returns accordingly oh and by the way enjoy the rest of your summer!" I've met Circular 230, have I not? In the example I gave I have zero obligation to find out if they complied with my instructions.

Here is what I like about Bird's suggestion. Let's presume I am required to do the 1099, because as a risk averse person that is what I would like to assume. If I prepare the correct 1099 then no one can suggest I was complicit in any bad decisions made by a taxpayer. If I prepare the 1099 correctly as a THIRD PARTY and the Plan Administrator decides not to (or forgets) to file the 1099-R, that person bears the responsibility of their own decisions. I have complied with any reasonable obligation that someone might think befalls me. I am not legally obligated to file tax forms on behalf of a client. I am merely preparing a tax form for which it is their responsibility to file, even though I might for some other clients file that form electronically. Again, I am trying to figure out the minimum threshold for me comply with the paid preparer rules. It seems to me I cannot be penalized for preparing an accurate form for the client to file if the client is the one who chooses not to file.

That's quite brilliant actually. I think what it comes down to is at that end of the day I am a THIRD PARTY. If a client doesn;t want to file the 1099 I prepare, then that is on them. I have fulfilled my responsibility. It seems inappropriate for me to do something without my client's express permission because I serve at their direction. Thoughts?

Getting a good question from an auditor about our loan provisions. Admittedly they don't fit well with the TIAA-CREF bazaaro loan policies. Anyone have any thoughts on how to handle? "Participant directed" election includes a statement in the loan program that all loan payments will be applied to participant accounts. If I don't check that box it says loan payments will be applied as earnings to the general trust fund. Maybe I just edit that and say it's applied to the TIAA TRaditional Account. Anyone run into this before?

OK I change my answer. You are "permitted" to disregard the match but clearly you don't have to. (6) Plan must satisfy ACP with respect to employee contributions. If the plan provides for employee contributions, in addition to satisfying the requirements of this section, it must also satisfy the ACP test of § 1.401(m)-2. See § 1.401(m)-2(a)(5)(iv) for special rules under which the ACP test is permitted to be performed disregarding some or all matching when this section is satisfied with respect to the matching contributions. See § 1.401(m)-2(a)(5)(iv) (iv) Matching contributions taken into account under safe harbor provisions. A plan that satisfies the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for a plan year but nonetheless must satisfy the requirements of this section because it provides for employee contributions for such plan year is permitted to apply this section disregarding all matching contributions with respect to all eligible employees. In addition, a plan that satisfies the ADP safe harbor requirements of § 1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4 percent (3 1/2 percent in the case of a plan that satisfies the ADP safe harbor under section 401(k)(13)) of each employee's compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees.

But would it be enough to say "Plan Admin, you gave us bad data, and as a result the 1099-R I issued is incorrect" and let them deal with it? Or do I have an obligation to correct it? I wouldn't think who is at fault would affect my obligations; I presume it only matters that we know an error occurred.

Our contract is definitely silent on the 1099-R's.

You don't qualify for the ACP Safe Harbor if you have after-tax. Now if you said you qualified for the safe harbor and you don't then you've got a document problem.

Example. Client took a taxable distribution in 2015 from a brokerage account which we did not know about until recently. What is our responsibility to provide a 2015 1099-R? Assume they have already filed their taxes and assume the amount is "significant." And assume we prepare their 5500. Does the answer change if the participant took 2 taxable distributions, and we reported one but not the other (and therefore a corrected 1099-R would be required). I think it is perhaps different if we learn that the form we actually filed is not accurate). Obviously the practical answer is simple: Do the corrected 1099 and do the amended 1040. That is NOT my question. My question is directed at understanding what our legal requirements are under the paid preparer rules.