jpod

I am not so sure that the serious issue may be resolved. It is too late to change the definition of "separation of service" in the plan.

I was referring to what seemed to be an arbitrary eligibility rule for the other plan: all HCEs are automatically in the employer funded plan.

Interesting. So if your compensation last year was $1 less than the threshold you sit at the kids' table but if you get a raise of $1.50 you can sit with the grown ups? Good plan design.

Assuming the payee is a person with respect to whom a payor is required to file a 1099-MISC (e.g., an unincorporated sole proprietor), why do you have any doubt about this? Aren't the instructions clear that a qualified plan is required to file them? Ordinarily it should be the trustee's responsibility but the trust agreement may kick that back to the settlor.

I was referring to the fact that paying him $75K more in salary and shortening the SERP period to 8 years would seem to be an obvious substitution and, therefore, an impermissible acceleration. I think it's pretty obvious this is not a public company because the OP refers to the "owner," so the CEO cannot be a specified employee.

So, the employer went to the trouble of setting up a plan, filing 5500s, distributing SPDs, etc., but is afraid of a little testing each year?

They haven't come up with any solutions because there (probably) aren't any. Your two ideas probably won't work either (not going to bother citing chapter and verse here, just take my word for it). Anyway, we are all flying blind in this post because you haven't told us what the SERP says. Does it say he gets paid starting only when he has a separation from service or does he get paid starting at age 65 whether or not there is a separation from service?

Ok, I guess we are talking about a small nonprofit that gets pro bono services from you and an investment advisor and either can't, won't or doesn't need to spend any more money on employee benefits and diverts all funds towards its mission. Fair enough. If no HCEs involved then obviously no 401(a)(4)issues. I think bottom line is that the risk of disqualification as a result of implementing this kooky idea is about as close to zero as you can get.

I think it's kinda weird, but I can't think of any problem with it as long as the identities of the persons getting the credit don't raise PT or 401(a)(4) issues. As to 401(a)(2), using plan assets for one participant is good enough to satisfy that. Not sure what it is, although it probably doesn't matter: An annual addition? An allocation of earnings?

You didn't say what the Trustees' roles are here? Is this a pooled plan for which they select plan investments or plan investment managers? Is this a self-directed plan and they are responsible for selecting the plan menu (rather than some other committee appointed by the Plan Sponsor)? Or, are they really nothing more than the legal title holders of plan assets who aren't responsible for doing much of anything?

I think the best option is to take the position that it was a perfectly valid NEW loan for $3,000, but there was an operational error in not coordinating with payroll, and seek correction on that basis.

The only thing I feel comfortable saying is that even if you are viewed as having investment advice within the meaning of the new rule, you can't be an investment advice fiduciary unless you are deemed to be receiving a fee or other compensation, direct or indirect, in connection with the investment advice. It sure sounds like you are not (and I don't believe a reciprocal referral by an advisor you recommend is a "fee or other compensation, direct or indirect," even if it leads to a new paying client for you). Ultimately you need to get comfortable with this on your own, preferably with the advice of ERISA counsel.

It sounds like the incorporated "partners" (a misnomer, actually) participate by virtue of their status as employees of their respective corporations, not as partners of the partnership (because they are NOT partners of the partnership if their corporations are the partners). Therefore, isn't this a plan covering employees of two or more members of an affiliated service group? I have to think that disqualifies you from using the EZ, but I am not sure.

Yeah, I was going to ask how confident are you that the accounts were set up the way they should have been set up to alert the b/d to the true nature of the accounts. Good chance they weren't.

Absent some weird facts which I can't imagine, it would be deductible in 2016 (subject to the applicable deduction limit for 2016).

Section 409A of the Internal Revenue Code. (Although it is not an excise tax; 409A imposes additional income taxes if it is violated.)

MPPP contributions are not mandatory. Can always amend to eliminate with 204(h) notice. You can make profit sharing contributions "mandatory" in sort of the same sense.

I guess a more fundamental question is why still 2 plans?

I don't know about "accounting method," but I would never sign the return as the preparer if the return claimed a deduction for a contribution which had not yet been deposited, but that's a different issue then the one discussed here.

Why do you think that 77-4 isn't directly on point and applicable?

Your second paragraph makes a very fair and perceptive point. However, the fact is in the case I am looking at the only HCE made no contributions and received none. Perhaps the answer is that this could be a slam dunk in VCP but there's no correction absent VCP (because demographic failures cannot be self-corrected).

Really? You intentionally give them wrong information?

Doesn't the correction methodology for missed deferrals assume that the ADP test, with corrections, has been run? If so, wouldn't correction have to include reducing the owner's elective deferrals down to 0% because the ADP of the eligible NHCEs was 0%? Perhaps in VCP the IRS may be amenable to giving the NHCE QNECs in an amount sufficient to pass ADP, plus earnings.

I think what you mean is that the HSA deduction amounts should be counted as compensation/salary for purposes of applying the 401k deferral % elected. If that is what you mean, I agree.

It would seem very odd that an SAR can escape 409A completely if it allows a service provider to exercise whenever he wishes, and to time his tax liability whenever he wishes, but not if there can only be compulsory excercises upon certain prescribed events or dates.