Bill Presson

Ms Carol, you don't mention specifically how the plan would be allocated within those groups. However, if the plan was cross tested with everyone in their own group, can't you effectively accomplish this?

I'm not an atty so I cant really say. Frankly, I don't see this as different from an Employer deciding what the profit sharing contribution is going to be each year in a cross tested plan with 1 group per person. The language is important.

:) Yeah, ETA didn't invent RTFD. I'm sure we all heard it for the first time when we went into the office of the resident "guru" and asked a silly question.

Employer contributions are considered as part of an employee's total compensation package all the time especially in medical practices. I can't comment on the specific language used in the agreement. It's possible that some attorney's know how to draft the agreement and some do not. But if you have any non-owner physicians working for one of your clients, something like this is in their agreement.

I would be a little curious as to whether it was actually a single participant. Generally all assets in a fund are moved to a like fund (which we know). But was a single participant the only one invested in the affected fund?

Having investment income, dividends, etc potentially treated as employer income rather than plan/trust income.

For pooled accounts, it's still a concern for identifying the assets as owned by the trust and not the employer.

There needs to be a way for the owner to waive compensation. Sometimes, that can be done if it's set up as a "house account."

I would definitely go with a new plan. No telling what kind of issues you might create by trying to roll the years forward without actually doing anything.

I agree that it CAN be done but isn't usually recommended. I liken the SH distribution timing to the deferral deposit timing. If we meet the 30 or 7 day limits, then we must prove nothing further. If we don't, then we have to show facts and circumstances as to why the timing was different.

Bill, this is [[[Generally]]] my take, but each case is different There are situations where HCEs should be limited around the beginning of the year from Maximizing their deferrals (e.g. deferring $18,000 on the first $25,000 in salary). In few instances, a couple of those HCEs may end up deferring $3,000 on the first $4,000 in salary and then leaving the company in January. Mathematically, you'd have $6000 in deferrals that sent two 75% deferral rates for HCEs in the ADP test; and the failures will cause those who deferred at $18,000 to receive distributions. I just say this to re-emphasize that each case is different. So, the demographics of the employees should be studied and the clients should be made aware of the different possibilities and then counseled into avoiding these types of pit falls. But, I do agree that most of the time it's not worth it. It does get challenging when you have HCEs who have low Compensation during the year but high (percentage of salary) deferrals. Good Luck! I will edit my response a bit to say that it is a different situation if there are multiple family members involved because the plan might be to maximize the contributions a certain way. But that doesn't involve document limitations.

I've always been opposed to limiting HCE deferrals in the document and I don't understand why. If a plan isn't safe harbor and it passes the ADP test, that means the HCEs could have deferred more.

I would recommend the Plan Administrator (eg employer) not approve it. Credit risk is still supposed to be a portion of the approval process even if a credit report isn't pulled.

We've (meaning this board) discussed this over the years. I'm firmly convinced that exceeding the incidental limits using this rule still requires the entire premium to be taxable as an inservice distribution. But many dont' agree. I filed a general information request a number of years ago. I also had several discussions with Jim Holland regarding that request. Those two things combined gave me the information I needed to know I was correct. Don't think many will be able to use it as a cite.

If you exceed the incidental limits, it's considered an in-service distribution and the entire premium is taxable.

There still might be an issue that needs to be corrected, but it just doesn't get reported like the auditor is requesting.

Yes, ma'am. But, y'all are both still eligible for expense reimbursement under his LPFSA.

Part of the issue may be semantics. 1. The 2017 limit is $2,600 for an employee/participant to contribute. That's true whether the employee is single, married, etc. 2. The dollars contributed, however, can be used for expenses for the employee, spouse or children. 3. As to your company's eligibility rules, that's plan specific and they control the eligibility. 4. His company nor your company can allow either of you to contribute an additional $2,600 for the spouse. 5. But since each of your expenses are eligible for reimbursement under the accounts, I'm betting that's what your HR people meant by allowing the employee to contribute for both.

"each deposit is supposed to pass testing" This phrase confuses me.

I would not make the decision or give recommendations at this point. I would put them in touch with an ERISA atty as soon as possible. Because I'm not sure the DOL is going to be terribly happy. In a bankruptcy, the judge would approve audit fees for the plan (if the sponsor had to pay) or the fee could have been paid by the plan. Obviously, I don't have the full picture, but just not filing doesn't seem like the appropriate tactic.

Correct. And a penalty still isn't triggered unless the person chooses to go to the marketplace and get a subsidized plan instead.

I just wanted to take a moment and publicly thank everyone involved in this board from Dave and Lois to the people that are constantly providing answers and guidance. Not sure how I would have survived in this business without this board. Thanks and I hope everyone has a wonderful Thanksgiving! WCP

Rollovers aren't included in the incidental benefit rule calculation at all.

I agree with your assessment. As soon as the transaction took place, he no longer worked for Co. B and that triggered an RMD.

Have you looked at the coverage testing if you exclude the liquor store participants? Assuming the husband would be an employee of the store (and excluded) you might pass. I've done that kind of thing several times before.