jpod

This is a question of NJ law, and I don't know what NJ law would say. I don't see how one could believe that it is clear cut without knowing how NJ would apply, or might apply, and also other facts which may be pertinent (e.g., did the decedent have a will; if no will are there other assets that would satisfy the spouse's statutory share under the intestacy laws of NJ; etc.).

Maybe "deplete" wasn't the best word to use; perhaps "reduce." In any event, if you got a significant benefit from itemizing tax deductions pre-Tax Reform the rent vs. buy analysis was quite different then it is now if you do not get any benefit from itemizing, which is the case for most folks.

Not to mention the extra 10% penalty tax, which I assume is in play here.

Consider whether buying a home - rather then renting another one - is really a good idea for you at this point in time if you must deplete your pre-tax retirement savings in order to do so. Renting for a while longer until you can save enough after-tax dollars may not be such a bad idea, especially if you are not going to itemize deductions for FIT purposes (which is WAY more likely these days given that the standard deduction for married couples filing jointly is something north of $24,000 and the limit on deduction for taxes is $10,000).

I am on MoJo's side here. I don't think the legal answer is clear at all. If you pointed a gun at my head I would say that you look at state law to determine if the minor has the capacity to enter into a contract to defer income, but aside from that I would suggest to the employer, if it was my client, that there is no reason for it to take any risk here and it should get the parent to sign off. This assume that the employer is not the parent, or a company owned by the parent, in which case I guess the risk is completely theoretical and not real.

Jaclyn, let's assume for the sake of argument that, even after further discussion the prospective employer REALLY does insist that the individual repay his plan loan. I agree that the Section 510 argument has potential, but I have a feeling that any attempt to explain to the employer that he is violating the law is not going to end well. He is likely to view that as you threatening a lawsuit if he doesn't hire you, even if you didn't intend to convey that.

Of course check the plan document, but that seems unlikely. Your either fish (a 5% owner) or foul (not a 5% owner); that one may be in a "position of control" is of no consequence. I assume you've run through the various ownership attribution rules and concluded that the individual is not a 5% owner by attribution.

I am sure you know that any decisions about how much to allocate to who must be guided by Title VII and comparable state laws' nondiscrimination requirements, but I thought I would mention it.

Collateral estoppel and res judicata have absolutely no relevance here. There is a provision in the IRC that, and I am paraphrasing and generalizing, prohibits redundant examinations, but I don't see how the case here where Entity A and the Plan are two different taxpayers. I don't see how the Plan's ownership of Entity A is relevant.

I think we all agree that for tax purposes most likely she would nonetheless be an employee, but that wouldn't necessarily stop her from convincing the employer to go along with the scheme if she thinks it benefits her. Fair point about the QBI deduction, but only if her FIT savings exceeds the extra she'd have to pay as SE taxes (unless employer is grossing her up for that).

Maybe I am giving the Office Manager too much credit, but if she is dreaming of setting up a big, fat DB plan for herself once she is an "independent contractor," this would create a tax risk for her (and not just for her employer).

What did you mean when you said ESOP files for EIN and uses such for all 5500 filings? Why didn't Entity A - as the Plan Sponsor - file 5500s? Also, you said that Entity A was audited for 12 and 13, so what would that have to do with an audit of the Plan?

You said "I know this would make her no longer an employee," which is why previous responders reacted the way they did. You also say you are not missing the point, so fair enough. I suggest you consider putting some of the concerns expressed here in writing and advise them to confer with a lawyer because if you don't it is likely that you and your firm will be blamed if and when the IRS comes gunning for the employer because of what sounds like a potential gross mischaracterization of this individual as a "non-employee." Also, good advice about checking the plan document. If it does NOT have the so-called "Microsoft" language then there is even greater risk to you and your firm.

Based on DOL AOs (or at least one AO) and the majority of case law (if not all case law), an unfunded disability plan or program whereby an employer pays no more than the individual's regular wages for the period of disability is a payroll practice not subject to Title I. I think there is little risk that the program described here would be an ERISA welfare plan. For what it's worth I think most employers, at least those who've thought about it, would like these plans to be subject to Title I, thereby allowing for preemption of State laws, but I would never advise an employer that such a position is likely to prevail.

If the vendor insists, and there will be no charge for the amendment, then sure, what the heck. But if there is a charge I would resist that and throw it into the next substantive amendment. This is silly stuff.

I don't know what the explanation is for Code G, but it's a direct rollover.

Why isn't it a "payroll practice" as defined in the DOL's regulation. That it is administered by the union and triggered by a medical condition would seem to be irrelevant facts, because ultimately it is just the employer that will be paying regular wages for time off. (b) Payroll practices. For purposes of title I of the Act and this chapter, the terms “employee welfare benefit plan” and “welfare plan” shall not include— . . . (2) Payment of an employee's normal compensation, out of the employer's general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons (such as pregnancy, a physical examination or psychiatric treatment); and

Donate? Doesn't it happen automatically?

Lippy: Thanks. I thought the insurance company just sends a letter saying "this is the minimum, and this is the maximum," but based on your reply I guess not.

Forgive me for saying "legitimate religious reasons." Strike the work "legitimate."

If you want to comply with IRS guidelines for self-correction, employee "refusal" is irrelevant, and of course the employer should just open the account and invest the money in the default investment. Are refusals anticipated for legitimate religious reasons which the employer wishes to respect? If so VCP may be worth a shot.

I have had virtually no exposure to 412(i) plans, so I'll ask knowing full well that I may look stupid: What "administration" is needed for a one-person, non-ERISA 412(i) plan (presumably with 5500-EZ filings) that would require a TPA?

700-participant DB plan. 5310 mailed 12/21/18. DL dated 5/24/19. 250-participant DB plan. 5310 mailed 4/13/18. DL dated 8/20/18.

Yeah, I don't know it is so c'est la vie. The individual was entitled to receive his account balance minus $3,000 for w/h, not minus $5,000 for withholding, so he had $2,000 less to roll over if he intended to roll over. It is especially nuanced since there is Roth money involved.

My recollection is this, although I am suggesting it only as a basis for further research because that's what I would have to do if this issue was on my plate: Even though the LLC is (probably) a "disregarded entity" for Internal Revenue Code purposes, the employees need to be employees in a trade or business to be counted under the 414(c) rules, so these employees would not have to be counted.