masteff

Based on the original post, the employer doesn't want to allow cash out, so by purchasing vacation as a block of days, this creates the risk of forfeiture. Also IMO Scenario 1 only works under a cafeteria plan because, outside of such, you can't get around the wage and hour laws. So then a quick review of what's allowed under a caf plan might be useful... Generally speaking, in a cafeteria plan, for unused vacation days, the employer either can cashout (or apply to another benefit allowed under the caf plan) or can forfeit. Carry forward can't be allowed as it creates improper deferral of income in violation of Section 125 cafeteria plan rules. And I'd have to think over the constructive receipt rules a little further to answer your last statement. But it would only be academic as those wage and hour laws we set aside would have sufficient weight on the analysis as to impact the outcome. So I'll simply bring those rules back into play and say you weren't permitted (outside a cafeteria plan) to deduct the unused days in the first place so they have to be restored before year-end.

As long as we recognize that in scenario 2 "vacation purchase" is merely a semantic for what's really unpaid time off, then I agree. In both cases, hourly wage is $25 ($52K / 2080 hours). So... Scenario 1: 52 weeks * 40 hours * $25 = $52K - $1000 vacation purchase = $51K Scenario 2: 51 weeks * 40 hours * $25 = $51K The advantage to the employee of Scenario 1 is that he/she gets a paycheck during that week (leveling of income). The advantage to the employee of Scenario 2 is no risk of forfeiture. The term "excused absence" comes to mind when discussing a non-exempt employee and an unpaid time off plan. Like in our factory, you get paid for a holiday only if you work the days before and after or you have an excused absence. But that's more just a thought out loud, as that seems be more what you're talking about here.

This is where you and I are misconnecting. Scenario 2 isn't a vacation purchase plan. It's an unpaid time off plan which is entirely different. Instead of looking at benefits regulations, IMO you should be looking at wage and hour laws. The DOL website page on Salary Basis employees says: "Deductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personal reasons other than sickness or disability..." Note the words "full days". I suggest having a written guideline in place so it's clear how many days per year can be taken and that those must be full days. Also, you can't deduct for more days than the employee actually takes off (ie can't let an employee buy a week and they then only use 3 days). Sorry for the earlier confusion, hope this helps.

This doesn't answer your question from the legal perspective but.... Reading the article, the writer is taking generalized concepts and trying to apply them at an individual level with bad results. Some companies are removing the 1-year wait for employees to make deferrals (for all employees as a whole, not for individuals). But that doesn't mean you can apply that at an individual level.

Maybe it would be useful for you to provide the specific language of the amendment because, as Peanut Butter Man notes, the plan language should make it very clear. Based on the language in the snippet I quoted here, I don't see how you can claim it's a moving 6-month window. I read the snippet as a threshhold, first you reach 6 months elasped, then you check for 501 hours but the 501 hours could be completed before or after reaching the 6 months elasped.

That makes sense. Thanks for all the help in understanding.

Just to be sure I'm clear on one thing, you're referring to the NC gateway, correct? And regarding top heavy, as long as the populations are the same for who got SHNEC and who should get TH amount, then it's satisified by same 3% NEC?

Might try to gauge just how much he really wants to fund this year and what % of earnings that represents. Sounds like the perfect candidate for an SEP IRA. Only slightly more limiting that a qualified plan, 25% of comp up to $45K. But then zero reporting burden. See IRS Pub 560 http://www.irs.gov/pub/irs-pdf/p560.pdf

I'm new to new comp plans. Trying to figure out if one would work for my current employer. If we do a safe-harbor 401(k) (not sure if SHMAC or SHNEC, leaning to SHNEC if we do NC), does that mean any NC component of the plan will pass top-heavy (by virtue of the safe harbor)? And is that answer the same for any type of profit share component, not just new comp? Thanks in advance for any clarification that can be provided.

Quicker -- lazier Tom-AY-to -- Tom-AH-to

That's subject to the rules of the plan. Need to ask the benefits department.

It will be taxable in year distributed since distributed after April 15 and/or 2-1/2 months after year end (which one applies depends on type of corrective distribution). See pages R-4 & 5 of instructions for form 1099-R ( http://www.irs.gov/pub/irs-pdf/i1099r.pdf ).

A quick look in my CCH pension guide shows ESOPs are subject to the same general rules governing the taxation of distributions as 401(k)s and other qualified plans. The only exception is the 10% penalty does not apply to certain cash dividend distributions. What you're talking about would not qualify for that exception, so the 10% would apply even from the ESOP.

If not consulting an accountant, Form 4972 is the proper place to look. Current version is linked above. The IRS website has prior years.

Right but w/ respect to the money rolled over, the participant has now commenced MRD's (ie reached required beginning date). Does the fact that he's in employment in the receiver plan override the fact that he's commenced MRD's? I skimmed the regs and didn't see anything that clearly says you can stop MRD's by virtue of returning to employment after reaching your required beginning date. Or there may be some other nuiance to the way the regs are worded that I'm missing.

By not filing for 8606, the IRS presumes the rollover was fully taxable, as they have no other way to know that part of the money was Roth. They likely were going thru 1099-R's and matching them to returns and found nothing on line 15 of Baumer's return which would immediately have triggered the tax and letter. The key now is to file an amended return w/ the 8606 and the rollover properly shown.

Link for FERS document: http://www.opm.gov/forms/pdfimage/RI90-1.pdf

Unless you have reason to suspect the change of address is fraudulent to avoid withholding taxes, process based on the state provided by the participant. If truly concerned, then review the withholding rules for State A and see if they explicitly require withholding on a part-year resident who is no longer in residence (I've never encountered such). If not explicit, then I'd leave it to the participant to reconcile any tax liability w/ State A when they file their state income tax returns.

Duplicate thread, see here: http://benefitslink.com/boards/index.php?s...c=36490&hl=

Nice catch, rcline. Got me curious. USPS website confirms it the govt's Thrift Savings Plan. Good quick info can be found here: http://www.tsp.gov/forms/oc94-20.pdf Per 2nd page, money from TSP is rollover eligible. So that puts us back to question, can person over 70 1/2 take MRD from Plan A and then do rollover to Plan B and elect to defer until retirement w/ respect to the amount rolled over?

The person you've spoken to is right but not explaining it very well. It's not just that the Trustee won't approve it. It's that Congress and the IRS have provided only a few very narrow reasons for hardship withdrawals. Ask the Plan to give you the list of qualifying reasons. One of the standard hardship reasons is medical expenses. You state you've had numerous med expenses not covered by insurance. These should qualify. You would need billing statements from the providers as documentation. You probably also have "explanations of benefit" from your insurance company, showing amounts you were required to pay out of pocket, which is good documentation too. Because this has gone on for several years, you may not be allowed to use the oldest expenses (up to a year back is probably reasonable but older than that is less so). While your current burden is the credit cards, the qualified hardship reason is the medical expenses, so focus on documenting that. I'll also point out that mortgage companies typically have a 15-day grace period. During that time your mortgage is technically past due but not reported to the credit agencies. During that period, you can request a delinquency letter be faxed to you; this letter will show you're past due and typically indicates that failure to bring your account current will result in foreclosure (sometimes they just ominously say something like "adverse proceedings"). You can then take that letter to your plan as documentation for a hardship to prevent foreclosure (make sure that's an accepted reason in your plan first). While I don't advocate not paying one's mortgage, when you're between a rock and a hard place you have to work w/in the rules given you.

Upcoming release dates (for CPI-U) per www.bls.gov site: August 2007 Sept. 19, 2007 8:30 am September 2007 Oct. 17, 2007 8:30 am (looks like 3rd Wednesday of following month) Table of data can be found here: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt To save you looking, July's number was 208.299 (which you could plug in for July Aug and Sept in CPI tab of the spread sheet above to get a rough idea). NOTE ABOUT SPREADSHEET ABOVE: looks like formula change didn't get copied from 2007 to 2008 & beyond; need to copy C26 and D26 to rows below for 2008 to work right. Oh, and A26 for catch up.

In addition to jevd's two key questions above.... You said you opened a 2nd brokerage account. Was it a Roth IRA account or just a normal non-IRA account? If it was a Roth, then that money might count as a rollover (if you did it in a timely manner). IRS Publication 590 might be helpful: http://www.irs.gov/pub/irs-pdf/p590.pdf Also see Form 4972: http://www.irs.gov/pub/irs-pdf/f4972.pdf And the instructions for form 8606: http://www.irs.gov/pub/irs-pdf/i8606.pdf And lastly that form itself: http://www.irs.gov/pub/irs-pdf/f8606.pdf If you didn't report the distribution and possible rollover correctly, you may need to file an amended return for 2005.

Generally speaking, if not covered by an employer's plan, you can only deduct the amount that's over 7.5% of AGI or, if you qualify as self-employed and had a net profit, the whole amount. See IRS Publication 502: http://www.irs.gov/pub/irs-pdf/p502.pdf

Since the issues about SSN vs TIN and including vs excluding NRA's w/ US source income have been covered, I'll throw a different comment in... I guess as a CPA, my biggest problem in this scenario is the outside CPA trying to rely on pending legislation. Even if the Senate hadn't rejected it, when's the last time any of you took action based on "pending" legislation? @ 4Kicks - I'd like to suggest you express concern to your client that the CPA was grossly wrong in fact (despite being generally right in principle). The client needs to be on notice that the CPA attempted to rely on pending legislation and might try to do so elsewhere w/ potentially adverse impact on the client. Business law is part of the standard body of knowledge for CPA certification and B-Law 101 says pending means 1) you can't rely on it and 2) you aren't bound by it.