AKconsult

Perfect - this was very helpful! Thank you!

I do not believe this is correct - there does appear to be a CE requirement. According to IRS Notice 2011-80, if a person has a provisional PTIN , there is an annual CE requirement. PTIN holders who do not meet the CE before 12/31/12 will not be permitted to renew their PTIN. PTINs must be renewed between 10/15 and 12/31 for the following year. According to a McKay Hochman email alert, individuals with a provisional PTIN used to complete Form 5330 must complete the 2012 CE requirement in order to renew the PTIN for 2013 (15 hours CE). However, my understanding is that once you become an ERPA, you do not have to satisfy any kind of CE for the PTIN, but there is an ERPA CE requirement. My confusion is that IRS Notice 2011-6 said that only 1040 preparers have a CE requirement and that individuals who only prepare forms 5330 are not subject to competency testing or CE requirement (according to ASPPA asap from 1/4/11)

Rev Proc 93-42 requires annual testing for 410(b) with the caveat that the snapshot day must be reasonably representative of the coverage throughout the year. What if the last day snapshot is not a reasonable representation? For example, I have a plan that was amended 11/1 to let in additional employees who were previously excluded. As of 12/31, the plan will pass the ratio percentage test. However, had I performed the test on 10/31, they won't pass. It doesn't seem right that I can just test on 12/31 and say everything is fine when in truth there were 10 months during which some employees were excluded. I can't find any guidance to explain how to do the testing in the year of a plan amendment that affects coverage.

I give up. Can someone please help w/ this question? I am totally confused by the AIRE/ERPA websites. If I have a PTIN (because I prepare Forms 5330) but I have not yet taken the ERPA exam, must I satisfy the CE requirement for 2012? I attended the ERPA conference this summer and I am assuming those hours will qualify, but how do I check that I was given credit for them? Thanks!!

Reg 54.4980F-1 Q-3: What is an applicable pension plan to which section 4980F and section 204(h) apply? A: Section 4980F and section 204(h) apply to an applicable pension plan. For purposes of 204(h), an applicable pension plan means a DB plan... or an individual account plan that is subject to ...funding standards of section 412 of IRC. Individual account plans that are not subject to funding standards, such as profit-sharing and stock bonus plans, are not applicable pension plans to which 204(h) apply.

I guess I am trying to determine if the control group rules would apply here, though. The person does not have any ownership in the business for which he teaches part-time and the income from that is totally unrelated to the income from the business that he owns.

We are dealing with an individual who owns 100% of a business with employees. That business does not have a retirement plan. This individual also teaches for a totally unrelated entity on a part-time basis and he is paid for those services on a 1099. Is it possible for this person to set up a SEP and contribute to it with his 1099 income, without having to take into consideration the fact that he is also the owner of another business, and pulling in the control group rules? Thanks!

I found the answer to this. Apparently there was a restriction on in-svc withdrawals for plans with permitted disparity if the participant had also at one time benefited under a DB or target plan. This is cited in Rev Ruling 71-446. However, the permited disparity regulations eliminated this restriction.

A local benefits attorney is telling me that the in-service withdrawal option for a profit sharing account is not available if the plan uses an integrated formula for the profit sharing. Is anyone familiar with this rule? I don't know what he is referring to. Thanks!

Question: A doctor who is a partner in an anesthesiology practice has supposedly terminated and is now an independent contractor. We are being told he is paid on a 1099 and is no longer a W-2 employee. But he is still an owner of the practice. He wants to take a distribution from the plan. I'm not sure where to go with this. This doctor is also a trustee. As a TPA firm, how much should we really question this?

Tom, I suspect that most of the HCEs are going to be in the group that is subject to the 30-days eligibility requirement. I am now thinking that I would treat this the same as you would treat it if you were aggregating 2 plans together for coverage and they had different eligibility conditions. I would run a coverage test assuming a 30-day eligibility requirement for everyone, but treat as not benefitting those employees who were subject to the 90-day requirement and weren't in the plan because they didn't work the 90 days yet...but then again, that seems too simple.

I am trying to determine what type of testing would have to be performed for a plan that lets one group of employees in after 90 days of service, and the other group in after 30 days of service. It seems like I need to do some sort of coverage or current availability testing. Would I use a safe harbor percentage? Would the otherwise excludable employees group come into play? I am having trouble thinking this through as I have never seen it.

The Final 415 Regulations allowed employers to choose whether or not they would include salary continuation payments for participants on military service in the definition of compensation. When the HEART Act was passed, it required that employers count differential wage payments as plan compensation. Are the terms "salary continuation" and "differential wage payments" being used interchangably for this purpose? In other words, is the purpose of HEART to override the 415 language? I know that salary continuation could be something different than just paying the difference, but are these 2 provisions really addressing the same thing, or 2 different issues? Thanks! UPDATE - I found the response to my answer in an earlier post.

Yes he is on the payroll, he just comes and goes. The question really pertains to whether or not he should be given a distribution from the plan. The employer knows there is a good possibility he will be called back into work, so from that standpoint it seems he is not terminated and not eligible for a distribution. But on the other hand, he is no longer drawing a paycheck and there is no guarantee he'll be called back in, so maybe he should be allowed to take a distribution.

How does a company decide that an employee is terminated and eligible for a distribution? Specifically in the case of a part-time employee who gets called in on and off over a long period of time? Should it relate to whether or not they are receiving other company benefits?

My brain is not functioning today. What is the terminology for the fact that you can't fund a 401(k) contribution on money that hasn't been earned yet? I am trying to give info to a client but cannot remember the terminology for this in order to be able to research it. Thanks!

If I am making a corrective amendment for 401(a)(4) within the 9 1/2 month timeframe, must I file with the Service under VCP? It looks like EPCRS is calling this a demographic error, that requires a filing. Or does that only apply if I am past the 9 1/2 month window? Thanks!

I am seeing conflicting information on whether the various employers in a multiple employer plan can have different age/service conditions and different vesting schedules. I realize that all service must be counted for all employers for these purposes, but is it permissible for each adopting employer to use a different eligibility or vesting provision than the sponsoring employer?

Well I am trying to digest it all, and think it through from the standpoint of the taxpayer. In this case, the individual deferred $7,000 too much into 1 plan for 2010. I understand his W2 shows his actual deferral for 2010, but the excess amount should be added to his income on line 7 of his 1040, so he does end up getting taxed on it for 2010. It looks like no 1099 is issued for 2010. We will distribute the excess plus earnings in 2011. According to the IRS Fix-It Guide, 20% withholding will apply. A 1099 will be issued with codes 8 and 1. The code 1 will subject the distribution to the 10% early withdrawal penalty. The taxpayer would normally report a distribution from a retirement plan on line 16, but the 1040 instructions say that if the distribution is on account of an excess deferral, the excess should be added in with income reported on line 7 instead. However, this doesn't seem to make sense. The 1040 instructions state that if a Code 1 applies for a distribution from a retirement plan, you do not have to complete a Form 5329. Instead, the 10% is calculated on line 58 of the 1040, which references back to line 16, so I think the excess should be reported on line 16, not line 7. I think the problem is that references to excess deferrals in the tax forms generally assume that the distribution is being made timely (before 4/15) and don't really contemplate a situation in which the distribution is made after 4/15, under EPCRS. If this doesn't seem like the right approach to anyone, let me know!

I can't find an existing thread on this topic. Am I the only one that sees conflicting information on this topic? Code Section 72(t) does not exempt returns of excess deferrals from the 10% early withdrawal penalty; Treas Reg 402(g) states that if the distribution is made on or before 4/15 then it is not subject to the early distribution tax of 72(t), but does not give any sort of exception when it discusses distributions made after 4/15. So those 2 things together would make me think that distributions after 4/15 would be subject to the 10% penalty. Also, the IRS fix-it guide indicates that the 10% tax is applicable if distributions is made after 4/15. However, if you look at the instructions to the 1099, 1040 and the 5329, there is nothing to indicate that the 10% applies, and actually the Form 5329 specifically states that the tax on early distributions does not apply to distributions of excess deferrals (with no discussion of the timing of the distribution). And we have been speaking to an IRS agent who insists it does not apply even for distributions made after 4/15. Does anyone have any insight on this? And if the 10% does apply, will it apply to both the years (the year deferred as well as the year distributed)?

We are doing some compliance work for a 403(b) plan that contains language that states that for 403(b) contributions, covered employees exclude employees who do not elect to contribute more than $200 for the year. The prior TPA did not include these employees on the 5500 count information, which put the count below the audit threshold. However, they did include them as zeroes in the ACP test. This doesn't seem right. Does anyone know how this should work? Also, what about 410(b)? Will these excluded employees be counted as not benefitting or just disregarded for coverage? Thanks!

If a plan document defines compensation as W-2 wages, should the plan include post-death cmpensation paid in the year of death and reported in Box 3 of the W-2 and on the Form 1099 MISC? Usually I just think of using Box 1 W-2 wages, but post-death wages only go in Box 3 on the W-2 from what I can tell, so I don't know if that makes a difference.

I remember reading something once that provided guidelines of the employer's rights during a DOL or IRS audit. It specifically addressed who can be present during the audit, it is different for IRS than for DOL. Does anyone have a good resource for this information? thanks!

Does anyone have any good insight on determining if an operational error is insignificant? I have a client whose ADP and top heavy testing was performed incorrectly from 2007 until the present. I'm pretty sure they will owe top heavy minimums for each year. There are only 11 participants. They would like to self correct, but if these errors are significant then we can't use SCP for the years where the correction period for SCP has ended. I've looked at the list of factors prescribed by the IRS but am still not sure.

Any suggestions on IRA holders who will take the LLCs? This is exactly what we are looking for. Dr is willing to pay for this, we just can't find any company that will do it.