K2retire

The document likely says the match is to be CALCULATED on a pay period by pay period basis. That doesn't necessarily require that it be deposited every pay period. However, if all the other employees got their match sooner, you could have a discrimination issue. For that reason, lost earnings might be appropriate.

We have a client who chooses to do increases on 7/1 to coincide with their salary increases. It is a calendar year plan, but EACA, not QACA.

We have a plan that recently paid QNECs of about $50,000 as part of a VCP filing because they had not previously been including the excess group term life in their calculations. Subsequently, the plan was amended to exclude fringe benefits from the definition of compensation. Our document has a totally separate line to exclude excess group term life. I thought that was so that you could exclude only GTL without excluding other fringe benefits. One of my associates thought that meant that GTL is not a fringe benefit for purposes of that exclusion. Since there isn't a clear definition of "fringe benefits" from the IRS, how would you treat it?

If the recordkeeper won't take a payment directly from the participant, he or she could give a check to the employer to deposit along with their regular deposits.

I've not heard that argument before.

They are required by law to have the records, but in my experience they rarely do and even more rarely to they understand that they are supposed to. If you can get them to understand that requirement, they can press the record keeper or TPA to get them the information.

There is something very ironic about a business trying to find a legal protection for not covering people that they are hiring illegally.

The employer has a fiduciary duty to make sure that loans, if offered, are properly administered. How they divide that responsibility internally is up to them. Failure to do so is grounds for possible disqualification of the plan, so it is in their best interest to figure it out.

Are you sure that the legal professional didn't say you could exclude NON-resident aliens?

I agree. This year, for businesses that were closed on 12/31, I've advised a couple of clients to list 12/31 rather than 12/30 as the term date.

I've also heard by the time the income is calculated -- which could be long before the return is filed.

But if the alternate payee rolls the funds to an IRA and then takes a distribution, the 10% penalty tax does apply.

I am inclined to call it a fringe benefit, although I didn't see anything on point in the IRS publication. Our in-house attorney said he would call it wages, because it is cash pay included in the W-2 regardless of the intended use of the money.

A plan uses W-2 compensation but excludes fringe benefits. The plan sponsor grosses up wages for the disability insurance premiums. Is that amount that is grossed up a fringe benefit?

I have been working with them trying to improve the process. Unfortunately, I can't bill them for all the hours I've put in because of our advisory relationship. (Not that it's prohibited, by anyone other than my boss.) The benefits manager has already been informed by the HR director that if she doesn't find and correct all of the errors before this year's audit, she will be fired. I'm glad I don't work for her!

To that, the answer is "sort of". It seems that the HR director of the plan sponsor believes all benefits (including 401(k)) stop on the last day of the month following termination of employment. So they've been stopping deferrals from final paychecks if they check date happens to fall in the next month. Did I mention that this company changed payroll companies due to the prior provider calculating compensation wrong and causing a $54,000 VCP correction?

State law typically prohibits a licensed professional from establishing a C corp because it is seen as a way to avoid liability for professional services. That is why professional service corporations exist. A quick check of your state's corporate laws may answer that question for you.

I don't think you can get more than one PIN. And they are probably not using a PIN for the plan EIN since it is de-activated, right? I was thinking for the company EIN, not the plan's. The client doesn't know what the PIN is because Paychex is making the deposits for payroll. Paychex is not inclined to do this for them or tell them the PIN that they are using.

It is my understanding that PenChecks will only do this if they handle the distribution. In this case the participant already has the rest of the money.

How is the auditor challenging the entry dates? Are they saying someone should be enrolled on their eligibility date because the payroll company can calculate immediate changes to deferral rates. I have had my share of arguments with auditors but this one has me scratching my head. Basically the auditor is looking at entry dates and payroll dates. They believe any payroll date after the entry date should include deferrals unless the participant has opted out. (And I agree with this interpretation.) The payroll company is looking at entry dates and pay period end dates. Because payroll is 5-6 days later than the end of the pay period, some people are being started one pay period later than the auditor thinks they should be. And the payroll company is also randomly starting some people earlier than they should.

I have a similar issue. According to the IRS, they only accept payment electronically. My client tried to sign up for EFTPS using his plan's EIN, but apparently it has been de-activated by the IRS due to inactivity. Paychex does his payroll withholding using the employer's EIN. Is it possible to get more than one PIN associated with the same EIN? The client has no idea what the one Paychex uses might be.

It is a nightmare. The client has an online portal for all things payroll and benefits related, but I don't really understand all of those details.

The issue is with people who are supposed to be automatically enrolled when they enter the plan without signing up. According to this payroll company, if a deferral change happens in the middle of the pay period, they do the days before the change at the old rate and the days after the change at the new rate. My inclination is that so long as they are consistent it should be fine. But the CPA who audited the 5500 has been challenging their entry dates. For that reason, I'd like to find something I could point to for justification.

They should -- but many of the won't.

I've talked to a particular client so much about their automatic enrollment errors that I'm not sure which way is up any more. Eligibility is age 18 with 1 month of service. Plan entry is immediately upon completion of the eligibility requirements. The client's payroll service is telling them that means the first pay period that ends after one month of employment. (example, DOH 9/10, pay period end 10/22, first eligible paycheck date 10/28) I always understood it was the first paycheck that occurs after one month of employment. (example, DOH 9/10, pay period end 10/8, first eligible paycheck date 10/14) Is there some flexibility in which way it is calculated so long as they are consistent?Is there a reference that I can provide to settle it?