GBurns

And the Benefits Link Jobs section here http://benefitslink.com/jobs/

Why should he have revealed excluded employees on the census?

Harwood et al Why can you not run the payroll? Where does it say so anywhere? How do you think the examples in Rev Rul 79-311 were done? This is something done very often by all the payroll processors so why can't an employer who processes his own payroll do it? Just ask the nearest ADP or Paychex sales rep how they correct the last payroll od the W2s. Correcting W2s is major money for ADP and how they do it very often is to rerun the last payroll without cutting checks.

Rev Ruling 79-311 deals with an employee returning unearned income and really is not on point. However, it is on point enough to clearly allow the procedure that i contemplated: "The company reported the adjustment with respect to excess commissions paid to B in 1975 when it filed its Form 941 for the first quarter of 1976. Also at the time the adjustment was reported on Form 941, the employer furnished B with a W-2 marked "Corrected by Employer" showing B's corrected FICA earnings and FICA employee tax pursuant to section 31.6051-1© of the regulations. B was given credit for the FICA employee tax attributable to the excess commissions B received in 1976 pursuant to section 6413(a) of the Code and section 31.6413(a)-1(a)(1) of the regulations." Here is a link where you can read Rev Ruling 79-311: http://www.taxlinks.com/rulings/findinglist/revrulmaster.htm

What is wrong with re-running the payroll correctly, so that the W2s are correct? Adjustment to withholding deposits will be reported on the 941 which has not been done yet so that can be corrected. Then either ask the employees for the difference between the 2 paychecks or have the employer write it off. The write off might constitute taxable income to the employee so you might need to run an extra payroll to handle the "gross up" of the taxes as per the IRS Revenue Procs etc which give the formula for handling employer payment of employee taxes. You can look at Pub 15 for reference or the BNA Payroll Adminstration guide for an excellent explanation. It also is not so difficult to export the payroll to an Excel spreadsheet and use that to calculate the tax liability for each employee then adjust the YTD figures instead of doing another payroll run.

This should be performed by an actuary for the claims administrator who should be providing the COBRA rates each year or plan change. I do not know of an easy non-actuary way, but maybe 1 of the resident actuaries might be able to help you. If you are not an actuary, I would suggest that you do not provide COBRA rates to anyone even if you are an employee doing it for your employer. It should be provided by the Claims Administrator. You stated that there are 3 COBRAs What rates are they getting and who developed those rates?

I have a very cynical view. I have been watching the tax shelter related arena for quite a number of years, probably starting in 1989 after seeing the surge in activity caused by '86. I watched how the IRS approached split dollar, reverse split dollar, springing cash value, 419 plan designs and many financial services industry concepts etc before BOSS etc came to the fore. This caused me to also be conversant with the preparer penalties etc and what is now called the tax shelter regulations. It seems that someone decided that the IRS needs more power after realizing that many taxpayers would test the IRS in court and probably win many cases. After this became a reality the threat emerged that more would challenge the IRS and the IRS might not be able to handle the volume. So IMHO the decison was made to "load the dice" for the future. How? No more "bright line" no more definitions, no more clarification. That way everything was subject to question and interpretation, that way many taxpayers might be willing to compromise rather than to head for court. To further "load the dice" there would be fewer Treas Regs and fewer Rev Rulings. Notice the number of Notices that have been issued . In some cases a short non commital Rev Ruling is issued alongside a lengthy Notice. Why a Notice? A Notice has next to no standing. IMHO the decision to use Notices was so as not to be held to anything hard and fast. It was necessary because the number of courts and cases that have been ignoring or setting aside Rev Rulings and GCMs etc has been increasing, and courts have been moving towards accepting the use of PLRs not as precedent but as explanations of the IRS position on an issue. The result is that the courts have been leaning towards preventing the IRS from espousing a position (PLR or otherwise) then striding to the podium to espouse a different position. Add to this the Supreme Court's decision in MEAD or the many cases such as Grande v Allison regarding Proposed Regulations and agency rulings. In other words, much that the IRS previously relied on has either come into question or failed them. So they had need for a new approach using attacks based on different support rationale, namely vagueness and subjective opinion.

Therein lies the problem. Employers, public or otherwise, do not step up to the plate. Items have to be introduced to them and then sold. They will put up with whatever they have until pressure is brought to bear, whether by a salesman, the union or by public embarrassment in the media.

Get his acknowledgement of your position in writing and sit back and wait. Either he does something (freeze, make the contribution, or continue as is) or he gets away with it or the IRS comes auditing and recharacterizes his income so then he has a profit.

I honestly do not understand what you mean. For quite some time you have had problems with 403(b) plan investment vehicles. You also have issues with what some employers are allowing. On top of this you were or are in a position to market to employees of these employers. And you have the interests of these employees at heart. Now I see the opportunity to give some guidance which at the same time allows you to correct that which is wrong. So what have I offended you with? Please let me know, it is too early in the year for confrontation.

I suggest that you read a few of the many summaries and overviews that have been published and which are available by going through Benefits Buzz on this wbsite.

Illegal or abusive tax shelters or transactions do not have to be listed. They do not even have to fall under the 'catch all category" used in the relevant Treas Regs etc of "Other Reportable Transactions". See the Regs and Circular 230 (current and Proposed).

Now you have a great new opportunity to save the people. Form a marketing team and canvass all the offending groups offering to save them from a fate worse than death, an enraged union. Or approach the unions and get an agent of record or similar blessing and attack from that end. This is a once in a lifetime opportunity for a TSA promoter.

Doesn't "at time of application" or "at time of approval" matter more than "at time of eventual slow processing" or "at time of delivery of funds"? When was the check actually drawn? At the time the check (distribution) was actually drawn, was it known that the situation had changed? Did the plan administrator know that the father was going to lend the money but did not inform the participant that this would disqualify her application etc?

Yes.

Work with 419 etc plans is vague. Do you mean work as in promoting them or as in getting people out of them or as in warning against certain plan designs or What? Are you seeking help with such plans? What sort of help? Most of all since 419 is just an IRC section, it means that you are most likely interested in some promoter's particular plan design or sales concept which would be a very different issue. There are readers and posters who understand the issues surrounding many 419 plan design concepts, but who might not understand the particular 419 plan design/concept that you might be seeking help with or have an interest in. So it might get you better responses if you give more details of the particular issue or concept involved.

If a company is acquired by a stock purchase why would there be any termination or even concern about ongoing employment? What happened to Company A?

As important as reading the Code, and just as important the Tres Regs, are, it is the application of the codes and Regs that will get you. Even if you learn the code and Regs you still have to learn the particular plan concepts. It also should take you quite some time to be adept enough to want to try and teach others about these plans. Not only do you have to know enough about the code and Regs, you also have to know the intricacies of each plan design and its legal basis and support. Usually you learn before you start planning to use the item. A suggestion for the future is not to allow the sales rep to waste your time trying to explain that which he probably still is trying to understand himself, but make him provide the technical specifications etc and give you access to his legal or technical support. That is where you are supposed to get definitive answers and not from a sales pitch. If the technical support cannot provide satisfaction, then you walk away.

Look at page 18 under "Format": http://www.irs.gov/pub/irs-utl/tres_reg-1125-1.pdf Look at page 18 under "Reliance on These Proposed Regulations": http://www.irs.gov/pub/irs-utl/tres_reg-1125-2.pdf Then look at hard copy version such as that done by CCH and read the "Caution" at the top of each page. You also might want to look at the similar disclaimer on many newer Proposed Treas Regs under the section "Proposed Effective Date". You might also want to look at comments made by judges in many recent cases from Grande v Allison to Mead v US in the Supreme Court regarding the validity of Proposed Regs. The Propsed Regs have been around since 1984 and 1989 and that length of time was even commented on in Grande. It might be good if any decision as to whether or not to follow any Proposed Regs is based on good legal counsel taking the facts and circumstances into consideration.

You state that the employee terminated employment yet this employee is newly hired. Which is it? Why would employees have terminated from a recently acquired company? Recently acquired is just a change in ownership. Did you also cancel the leases, the accounts receivable and payable? Existing employees are simply existing employees, they are not new hires, unless you mean that there was more than an acquisition that took place for some reason.

Why not state in your cover letter that "for sake of brevity only the last 7 years employment history is provided, the remainder will be provided if needed" or use the wording given by Belgarath ? That would leave it up to the prospective employer, if they are interested. And if they are you can repeat verbatim what Belgarath suggested.

Is it the employer's 403(b) plan that allows it or is it the employee's chosen investment vehicle? You might find yourself telling the employees something that might not be allowed as yet by a particular provider.

Although the agent might be from AXA, is the product (IRA Accumulator) also from AXA?

You made a good point. In looking back it is the failure to implement, administer and maintain the plan in accordance with the law that matters to the IRS. The fact that the plans were not even operating in accordance with their own plan document was irrelevant since they failed to be legal in the first place. The problems were lack of adoption, retroactive adoption, ineligible participants, no salary reduction agreement etc etc.

Based on your questions I suggest that you refrain from promoting any of these or related concepts until you have further researched the issues. Maybe you might want to start with a search of this Board for previous threads then a search on Google (using filter words such as disallowed, abusive etc). Additionally you might want to ask some of the larger insurance companies why they do not support either the plan designs that you illustrated or the concepts in general. Although every company cannot and will not all sell everything or the same thing, there has to be valid reasons why most will not touch these concepts especially what you illustrated. They will tell the reason why since most have published at some time an agent warning or newsletter on the subject. Both 412i and 419 have been around for a long time and there are many different sales concepts based on them. 419 concepts, in particular have been the object of a number of lawsuits. Many promoters are claiming to have plans that comply with the results of those lawsuits, but that remains subject to questioning. I think that in the last few months the IRS also issued some new rules with which I doubt that most can comply with. There are also the new 409A rules which might have an impact. So it is possible that a concept that was valid a few months ago might no longer be so. Do not base the legitimacy of any concept solely on the say so of any promoter of any concept. Take their explanation and have its legitimacy evaluated independently by a competent experienced person.