Chippy

Plan has a late contribution deposit in 11/2015. Company realized it and deposited the contribution three weeks late. Late deposit was found during large plan audit. Lost earning were calculated and were deposited to the plan in 7/2016. I'm preparing the 5330. Would the filer tax year be 2015, they have a calendar year. and if so, then the form is late since a 5558 was not filed, Or is the tax year 2016 since that is when the lost earnings were deposited? I've been reading and reading, and it seems like it should be reported for 2015, but doesn't seem fair since it wasn't discovered till it was found in the audit. Employer didn't realize it had to be reported as late. And if the 5330 is prepared for 2015, I have to prepare another 5330 for 2016 since that is the year it was corrected. Is there another excise tax due for 2016? if so, what is that based on?

If you disregard his prior service and start over on rehire, he wouldn't participate until 1/1/2018. Which is what the employer is doing. They literally were looking for 24 consecutive months of service.

A profit sharing plan (no deferrals) requires 24 months of consecutive service and then enters on the 1st of the year preceeding meeting eligibility. If a participant is hired on 3/15/2014, terminated 12/22/2015, and rehired 3/24/2016. Since the participant terminated prior to having 24 consecutive months, does his eligibility computation period start over on his rehire date?

Thank you. Company A with the physicians is already a large plan. company B & C each have less than 50 participants. So they aren't trying to avoid an audit. The doctors just joined practices earlier this year, so nothing has happened yet. I'm not sure why they want three plans, but only one trust? still in discussion.

I have a doctor group. Company A has 41 doctors/owners participating, all owning equal shares. 19 doctors own company B and the other 22 own company C. Company B and C's plans are for the employees of the imaging centers the drs. own. It has been determined that this is an Affiliated Service Group, not a controlled group. ****They want to continue to have three separate plans but have the assets combined in one. Is this allowed? The trustee/custodian would have to split the assets by company to complete the individual 5500s.

thank you. Yes, the intent is for two years from hire date. When the document was mapped over from the prior document, there is an elapsed time option and an hours of service option. Evidently the hours of service option was picked. The elasped time option should have been the correct choice and it wasn't pickup up on until now.

We have a difference of opinion on how the plan should operate. Plan requires 2 years of service and then enter on 1/1 Coincided with or immediately preceding. The question is, how are the 2 years counted. Is it 2 years from date of hire, or is the first year, from date of hire to 1 year anniversary and then switch to plan year. Below is wording from the document. I think the SPD is confusing. "Eligibility Computation Period" means a 12-consecutive month period beginning with an Employee's Employment Commencement Date; provided however, his succeeding Eligibility Computation Period for such purpose will switch to the Plan Year, beginning with the Plan Year that includes the first anniversary of his Employment Commencement Date. An Employee who is credited with a Year of Eligibility Service in both the initial Eligibility Computation Period and the first Plan Year which commences prior to the first anniversary of the Employee's initial Eligibility Computation Period will be credited with two Years of Eligibility Service. "Year of Eligibility Service" means the following: With respect to eligibility to receive Profit Sharing Contributions, Year of Eligibility Service means an Eligibility Computation Period during which an Employee completes at least 1,000 Hours of Service. If the Plan provides for fractional Years of Eligibility Service, an Employee shall be deemed to earn 1/2 Year of Eligibility Service on the date that is six months after the end of the Eligibility Computation Period during which he earns his first Year of Eligibility Service; provided that the individual is an Eligible Employee on the applicable entry date. Section 3.01 PROFIT SHARING CONTRIBUTIONS Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan with respect to Profit Sharing Contributions on or before the Effective Date shall be a Participant eligible to receive Profit Sharing Contributions pursuant to Article 4 on the Effective Date. Each other Eligible Employee who was not a Participant in the Plan with respect to Profit Sharing Contributions on the Effective Date, shall become a Participant eligible to receive Profit Sharing Contributions on the first day of the Plan Year coincident with or immediately preceding the date he attains age 21 and he completes two (2) Years of Eligibility Service; provided that he is an Eligible Employee on such date. The SPD says: ELIGIBILITY FOR PARTICIPATION Eligible Employee You are an "Eligible Employee" if you are employed by Company or any affiliate who has adopted the Plan. Profit Sharing Contributions You will become a Participant with respect to Profit Sharing Contributions on the first day of the Plan Year coincident with or immediately preceding the date you attain age 21 and you complete two (2) Years of Eligibility Service, provided that you are an Eligible Employee on that date. Computing Service With respect to eligibility to receive Profit Sharing Contributions, "Year of Eligibility Service" means an Eligibility Computation Period during which you complete at least 1,000 hours of service. "Eligibility Computation Period" means a 12-consecutive month period beginning with your first day of employment. Any succeeding Eligibility Computation Period will then switch to the Plan Year, beginning with the Plan Year that includes your first anniversary of employment. You will generally earn an hour of service for each hour you are paid for the performance of duties for the Company (however, numerous exceptions and special rules apply).

I have a top heavy safe harbor 401(k) Plan. There are deferrals and a 3% non-elective safe harbor contribution. NO profit sharing contribution being made this year. Plan excludes compensation prior to participation. Is it correct that the 3% safe harbor contribution for a participant that was eligible to enter the plan on 7/1/2015, calculated on his 7/1/2015 to 12/31/2015 compensation satisfies the top heavy minimum for 2015? (As opposed to using his 415 annual comp)

I have a plan adding a QDIA to their plan in 2016. It is on a FT William VS prototype. The Adoption Agreement does not mention the QDIA, it is included in the administrative elections. Since it is not mentioned in the adoption agreement, I'm assuming that an amendment does not need to be made. Is a corporate resolution or any other type of documentation needed to add it to the plan?

Help! an employee became a partner mid way through the plan year. For 2015 he has 415 comp and self employment earnings. To keep it simple he has 85,000 in 415 wages and 85,000 in self employment earnings. Contribution formula is 7.5% of comp plus 5.7% of comp in excess of 118,500. Since he only became a partner mid way through the year, he is not taking a deduction for the employees' contributions only his own for the self employment earnings. The other partners are taking the deduction for his contribution on the 415 earnings. How would I calculate his contribution and divide it between the 415 comp and the self employment earnings? He also has deferrals for the year. thank you

Yes, that is pretty much how the basic document reads. So if she is eligible on her rehire date, which is what I thought, and since she has no comp from her rehire date to 12/31. (all counted as 2016 earnings) Is she entitled to the top heavy minimum for 2015 only? No safe harbor? Just making sure I am thinking correctly. I don't think I have ever come across this situation.

Eligibility for plan is 1 year, age 21 and 1/1 and 7/1 entry dates. Participant started working on 1/20/2014. She had her one year of service on 1/19/2015. terminated 5/29/2015 before her entry date of 7/1/2015. She was rehired on 12/28/2015. Since the participant met the eligibility requirements before she was terminated, does she enter the plan on her rehire date? Plan is FT. Wm non-standardized. She had 1,000 hours in 2014 and 1,000 hours in 2015. If she does enter on 12/28/2015, her comp from 12/28/2015 to 12/31/2015 will be considered 2016 comp and is on her 2016 W-2. so she would have zero comp for that period. Plan is safe harbor with a 3% SH non-elective contribution and additional profit sharing contribution. Plan is also top heavy, would she get a top heavy minimum contribution on her wages from 1/1/2015 to 5/29/2015, her date of termination? And no safe harbor for 2015 since she had no comp for the period after her rehire date?

A medical practice invested plan funds in a real estate investment partnership which owns the property that the practice utilizes for office space. Would this be allowed? I've been searching and I really can't find anything that says either way. The property is not valued every year, it was valued last year for the first time in 16 years when one of the Drs. sold their shares. The plan owns 6.67% of the real estate investment partnership, it invested about $79,000 in the investment. I'm leaning towards it is allowed, but feel it should be appraised every year. Agreed? Thanks for you time.

Plan excludes reimbursements or other expense allowances, fringe benefits, moving expenses, deferred compensation, and welfare benefits from the plan definition of compensation. (the usual) The employer gives the employees money to cover the cost of their health insurance premiums. It is included on their W-2 and is taxable income. Would this come under any of the above excluded categories?

the company does do a partnership agreement each year with the contribution listed for each participant. Is that enough?

Below is the section from the adoption agreement. Is there something that I can refer the client to for reassurance that it is ok for each partner to do their own thing? [ X ] New Comparability - One Group per Participant. In an amount designated by the Company to be allocated to each group. For purposes of this D.18g, there shall be one group created for each Participant eligible to receive allocations of Profit Sharing Contributions. The contribution shall be allocated to each group in a manner determined by the Company. The amount allocated to one group need not bear any relationship to amounts allocated to any other group. The Company shall notify the Plan Administrator and/or the Trustee in writing of the amount of contributions allocated to each group.

In a new comp 401(k), is it acceptable for each partner to decide their employer contribution? The plan is set up for individual groups. Partner A - makes the maximum. Partner B - does a flat $5,000 and Partner C - wants to contribute zero. Is there a reg. that we can refer to? Thanks

The employer does put the money into the plan if the participant elects. It goes towards the deferral limits and is tested in the adp test and is deposited to the employee deferral source.

I'm trying to map a plan document for PPA. My current plan document has a cash or deferred profit sharing contribution where the participants can elect to either take in cash or defer up to 50% in to the plan. The document we are using does not have this as an option. I was told it's basically a bonus and that the plan has a special election for bonus and it would come under that. The plan also has another employer contribution they call retirement contribution which is 5% of pay. Would you agree that is is ok to not have the cash or deferred profit sharing mentioned in the plan document and to handle it like a special election on the bonus? It's on a volume submitter prototype format.

Thank you. That's what I thought.

There will be one plan, Plan A. Plan B is merging into A.

A participant leaves company A and is 100% vested (3 years of service) He is employed from 8/06 to 3/2009. He was later hired by Company B on 7/1/2014. 2 years, 0% vested as of 12/31/2015. Both plans have a 3 year cliff vesting schedule. In 2015, Company A and Company B merge. He never took a distribution from Plan A. Plan uses Rule of Parity for vesting service. Will this participant be 100% vested in his Company B balace when the two plans merge in 2015? Plan A is counting vesting service from Company B.

I have a plan that has a quarterly rewards program based on the profits of the company. They give the participants the choice of taking it in cash or putting it in the retirement plan. What testing must be done with this? I believe I have to include it in the adp test? but does it also count towards the annual deferral limit? any other testing I should do?

I have a spreadsheet that I use to calculate the earned income and contribution for the partners. I was looking for a back up since my spreadsheet is older and I wasn't sure if it is still accurate.

Is there a calculator/spreadsheet available that I can use to calculate the self employment tax and employer contribution for a partnership? I tried the IRS website and couldn't find anything, also tried searching online and came up with nothing. Thought maybe someone on here would know where to find one. thanks.