Bird

Agreed. It's actually in the regs; see prior post

Business owner(s) and spouse if only one owner is (are) virtually always trustee on our plans (all small - max a few hundred participants). Little discussion on that.

Do you explain the advantages and disadvantages of automatic-contribution arrangements? No. As others have noted, just something to screw up. Do you talk about whether to allow or preclude participant loans? Yes, discourage them but suggest that if they think they want them, limit them to deferrals only so employees are not borrowing employer contributions. Do you talk about whether to allow or preclude hardship distributions? Discuss to the extent of telling them why they shouldn't have them. Do you discuss the several choices for service-crediting methods? If not, what information do you gather to discern which methods are the better fits for a particular employer? No Do you usually discuss whether to include or exclude nonresident aliens? If usually you don't, do you discuss it if the workplace is within commuting distance of Canada's border? No. Always excluded I think without discussion.

Box A should be each individual's net self employment income; that's what you want. C is gross; do not add them! It doesn't hurt to reach out to the accountant to confirm. And technically you should be subtracting unreimbursed partnership expenses for each taxpayer...

We'll have to disagree about the hassle factor, I think it is very real. But I take offense that you say I am not serving my clients well. I fully understand all of the implications and I said, twice, that if anyone needed J&S provisions we could just add them.

Edit - after more careful reading, the ASPPA presentation does in fact cite the Q&A from 2005 and there is a an additional section that does agree with the conclusion that someone who "terminates" on Friday Dec 30 is not in fact employed on Dec 31. (But that is weirdly not supported by the two bullet points below.) I left my whole erroneous post below...just because. I guess my take is that someone could "terminate" on Jan 1 so their last day at work would be Dec 30 but they would be employed on Dec 31. I remain very cautious about saying that someone who "terminates" on Fri Dec 30 is not employed on the last day. IMO the difference between "terminating" on Dec 30 vs. Jan 1 is touchy at best and certainly any employee who voluntarily terminates would say "Jan 1" if they understood the implications. ___________________ Original post: Just to be clear, that prior discussion reached a different conclusion, or at least there seemed to be a majority opinion, that differs from the cited resource. From the ASPPA text: If last day of a plan year = Saturday, Sunday, or holiday, and a participant is considered an “employee” on the last business day of the plan year, then the participant is considered “employed” on last day of plan year. Example: a retirement plan has a last day of the plan year rule and Dec. 31 falls on a Saturday. If the company usually conducts business from Monday to Friday only, and an employee’s last day of work was Friday, Dec. 30, the employee is deemed to have satisfied the last-day requirement. (I happen to agree with that interpretation. But it is "just" an outline from a presentation of some sort without cites.) The prevailing view in the prior discussion was that someone who term'd on Friday Dec 30 was not employed on Dec 31. The cite from the 2005 Q&A seems to support this position, but as Larry notes, he proposed the answer and they agreed with it, but my honest opinion is they didn't read it carefully. (It's fair to ask "who am I to say" but I have seen it happen.) In fact the presentation seems to use exactly the same fact patterns, including discussions about vacation time and the firm being on vacation, maybe from the same Q&A, to reach a different conclusion.

Again, it is NOT the J&S provisions that we want (we would prefer they go away); it is the MANDATORY 100% death benefit to the current spouse rather than only 50% that is the problem. See my other response on this issue. Well, I get that but "again" my point was that waiving the J&S provisions 100s or even 1000s of times to get what you want for a handful of people is an awful hassle, and if you "need" it for an instance or two you could always just add J&S provisions to a PS/401k plan when necessary.

Interesting. When we switched from EZs to SFs (it wasn't quite 100 years ago ) we did NOT check the box and I don't recall any issues. I'm inclined to think it doesn't matter but side with QP_guy here.

Doesn't sound familiar. If the plan also has a last day requirement that would mean that no one has met that requirement and the formula could be changed.

I just skimmed them but the quotes appear to be accurate. They changed the terminology from "plan" to "account" but if you read the intro he had two separate plans and therefore he must take RMDs separately from the two plans (but in the details they used "Profit sharing account" and "401(k) account"). If you have one plan with multiple accounts or sources I agree, it doesn't matter where the money comes from.

From a plan administration standpoint my reaction to this was "yeah, so?" It's exactly what I would expect. From a policy standpoint I guess it is interesting and has obviously generated much discussion. The differences at this point really do seem random and not justified by any policy goals. As far as J&S provisions when they are not required, we do not include them and have removed them where possible. The hassle factor of the waivers at time of distribution is just too much for the very rare instance where you can't accomplish what is needed with a spousal benefit waiver, and even then, you could always add J&S provisions if it was that important.

Wait a sec. You are simply filing a 2017 form and catching up on people who should have been reported in prior years, right? If you file that form on time, there won't be any penalties. Unless there is some kind of audit program I don't know about where they are actually reviewing the 8955 for accuracy in the timing of reporting term'd participants.

OP changed the "facts": "Actually, the accountant informed just now that she was referring to the elective deferral of the principal, shareholder of PC."

It's kind of confusing but I think you are saying that the 2017 deposits exceeded $18,000, but some of that was really for 2016? It's not at all unusual for deposits to cross years, so I don't see it as a big deal at first blush. If the contributions were in fact withheld from his pay in 2016 then they must be deposited (lateness being another issue). Could just be that someone "coded" them with the wrong year. Or it could be that it's a total mess, with the guy just throwing money in and backtracking to try to make things work out. This is a poster child for 1) brokerage firms sticking to handling investments and not trying to keep track of contributions by year, and 2) having someone knowledgeable "run" every plan, no matter how small. This question doesn't come up if someone does a 2016 val, compares withholding to deposits, and reconciles assets.

I don't think PS-58 cost basis would transfer with the policy so the cost basis is simply the purchase price. I seem to remember that long, long ago, if you didn't take a policy as an actual distribution, you lost your basis, but then there was a ruling or something that said yes you get to keep that basis even if you surrender or sell the policy in the plan, but that's very fuzzy. In any even, IMO if there is any basis it is in the plan.

I agree with the other responses being technically correct. But if a sponsor wanted to use a rehire date as a hire date because it brought someone in earlier in the same year I doubt I would make a fuss over it. Having said that, are you positive the eligibility measuring period doesn't switch to the plan year (presumable calendar) if someone doesn't have 1000 hours in their first employment year? In that case, if he worked 1000 hours in calendar 2017 he would enter 1/1/18. All (I think) of our plans are written that way because we can't be bothered checking on hours for continuous off-calendar years.

Believe it or not, some 401(k) plans are pooled, and they can/might have checking accounts. In that case, it is in fact a simple matter of writing a plan check.

Let's be clear about something. If you "allocate" on a per payroll basis, and check that box, then there is no such thing as a "true up." You just do your calc each pay period, correctly. If there's an error and you don't make those deposits by, I think, the end of the next quarter, then you have to correct with interest. (For a SHNE plan the contributions should be the same whether done per payroll or annually. But...my office is NOT getting involved with per payroll calcs, and in my cynical world view, leaving it to the payroll company or, maybe worse, the client, will result in frequent errors. So we would never allocate on a per payroll basis. I do have one SH match plan that allocates on a per payroll basis and I am comfortable washing my hands and assuming it is correct, with a caveat that we aren't checking that.) But if you say "allocate" on an annual basis but informally fund it each payroll, I think that is ok. If there were errors then true them up at the end of the year, no problem. As long as it's not discriminatory in practice, and as I've seen it done, it's the rank and file that get the money put in each payroll, for cash flow reasons.

Not surprising. As I said earlier, doing it directly would involve some hoop-jumping.

I understand about springing cash value policies. But insurance products have to be registered and approved (they were). I'm saying you can't go to an insurance company and cut some kind of special deal as was being implied.

945 is only required if there is withholding. We may have filed one because of other distributions, but not for this.

I'm having a hard time understanding why this thread continued beyond this post.

Insurance companies can't do off-the-cuff arrangements to sell single premium annuities so the concept of an intentionally-inflated price is not valid. Breaking it down... If a plan has $500K in cash and distributes it, it's worth $500K. If a plan buys an annuity for $500K, the annuity is immediately worth less than $500K, due to surrender charges. (This is largely due to commissions which are paid up-front, and recovered by the insurance company from annual fees, either direct or indirect.) If the surrender charge is 6%, then the surrender value is $470K. The fair market value, which is the relevant value for plan purposes, is probably a tad higher (because there is a slight chance of getting the purchase price - if the annuitant dies). Now, there are many different products available within companies and by different companies, and you can certainly find one with a 10% surrender charge, but that is due to a higher commission paid to the agent. So, however you do this, congratulations - you have reduced the value of something by giving some of that value to an insurance agent and insurance company.

OK, yeah it would look better if it went through the personal checking account but I agree - it is ok if it went directly.

The one time - that I can remember - that we paid a charity, we did not withhold, and we issued a 1099-R. If the statute says that only individuals can opt out, I guess we didn't know and/or ignored it. There were no subsequent problems.