ETA Consulting LLC

Most governmental and church plans are exempted from the spousal beneficiary rules. It "may" be in uphill battle. Good Luck!

Not necessarily. Typically, the requirements apply at the time the loan is issue. It's still secured by 1/2 the loan balance, but the residence requirement allows the payments to extend beyond 5 years. Good Luck!

Yes. It's not a "loan default", but a "loan offset". No problem.

I agree with most of what you stated, except that VCP isn't necessarily a leap. There's nothing to be fearful and it's an opportunity to come up with a solution and get IRS approval to remove all uncertainty. Tax issues aside, you have to also look at the potential "employee rights" issues. I don't necessarily believe that you can say employee rights under the plan is a moot point because there wasn't a plan (due to there being no trust). You may be right. It's just a bit much to swallow. Good Luck!

You're looking at a "false start" to a plan that was created, never communicated, and never used. Any notion of a larger correction to HCEs above NHCEs isn't going to happen. Given that, as fiduciary, the sponsor clearly failed to enforce every particpants' right to defer under the plan, I don't see anything insignificant about it. I'd go the VCP route. I've seen worse. Good Luck!

No question is stupid, ERISA1. If you need to know, it's better to ask - and where would be a better place to ask than on a board full of industry experts??? I'm pushing the "like" button. Too many times we will proceed along a path because we're too afraid to ask. Just look at it like this: "When someone antagonizes you for asking a 'simple' question, it is a reflection of their lack of self esteem; not yours Good Luck!

The rules clearly state that the 401(a)(17) limit is for "Testing" only and does not trigger a mid-year deferral stop. The plan's document, however, may be written to say anything (i.e. once a participant's compensation during the year exceeds $250,000, then no additional deferrals may be made). This makes it even more interesting since ADP's payroll processing it totally separate from any qualified plan operation; leaving them in no position to make that call. Good Luck!

Yes.

Correct, if by "deemed" you mean that an actual 1099-R was issued for the outstanding loan balance. When there is a subsequent distributable event, then the "deemed" distribution becomes an "actual" distribution that would've already been taxed. Good Luck!

True, Regardless of how the amounts are allocated, they are going to be tested the same (e.g. a rate group is defined as an HCE and all employees receiving a rate at least equal to that HCE). The only thing you can't do when there is 3 defined groups is have more than 3 allocation percentages. You can alway have less. Good Luck!

Typically, a hour of service is defined as a hour for which the employee was paid. If there was no compensation, then the question would become whether the individual was credited an hour of service. It may be an issue of how an hour of service is actually defined under the terms of the plan; but worth mentioning. Still a good "what if" question. Good Luck!

No. Tyically, NQP's are paid out as W-2. You will need exact details on what you are trying to do since the types of NQP are broad. Good Luck!

You're correct. It's more effective to create a spreadsheet as soon as the rules are changed. When you wait on the IRS to create the new form, there's always a delay.

There are several exceptions to the withholding requirements when there are "cashless" distributions. Loan offsets are one of those exceptions. However, if the participant were to attempt to pay $6,000 in taxes as a withholding, then the withholding would then be based on $36,000; so the $6,000 in withholding would no longer be enough. It creates a circular calculation. Good Luck!

I'm pushing the "like" button right now.

Sure. The're on the Form 1040 Schedule SE. I may have mis-read the original question as to what amounts are being divided by two. I see your point, instead of dividing by 2, you're actually multiplying by .5751. Step 6 on Schedule SE. Good Luck!

You forgot about the additional 2.90%; which is 1.45 multiplied by 2. So, your 15.3% is reduced to 13.3%; not 10.4%. Remember, you're only applying the "earnings" calculation to "92.35%" of salary. So, if an owner makes $100K, you'll calculate 13.2% of 92,350. This will be your self employment tax. 1/2 of that will be your reduction (which will be reduced from the $100,000). Good Luck!

I think I see what you are saying. The employee pre-tax contributions to an HSA are excluded from FICA; where FICA is the box 5 amount and those pre-tax amounts are made through a section 125 plan. This would mean that your method of calculating W-2 would have to be box 1 plus deferred amounts. Or, as you suggested, adding those HSA amounts back to box 5. Good Luck!

No. The number of "participants in a single plan" is what determines the need for an audit. That is a strategy for some companies having more than 100 employees; create separate plans to prevent each plan from meeting the definition of a "large plan". Good Luck!

It can be done. If the loan terms preclude the possibility, then you'll need an amendment. The note that the participant originally signed will become an asset of the new plan (and belong in the 'rollover' source). It's just an in-kind rollover; similiar to any other in-kind rollover. Good Luck!

It sounds like a 'taxable' fringe benefit and, therefore, should be included. Just shooting from the hip as I am not privy to all details. Good Luck!

I would do a source switch on the transaction so the entire amount came from the Deferral Source. It's a simple 'recordkeeping' technique. You should ensure that the hardship availability amount was not miscalculated. Good Luck!

Benefitslink could really use a "like" button.

I'm confused with your fact pattern; is this a successor plan?

It depends on what is being outsourced. If it's a pure button pushing operation, then there may be some advantages. It will quickly become your nightmare when the skill requirement is higher. Good Luck!