Flyboyjohn

Plan has age 21, 1 YOS, dual entry eligibility requirements for all contributions except prevailing wage contributions which have to be made whenever an employee works on a prevailing wage job. For purposes of counting participants on the first day of the year do we have to count all employees since they potentially could be assigned to a prevailing wage job or can we somehow split the baby and only count those employees who haven't met "regular" eligibility but who are in fact working on a PW job on the magic date?

VCP is only available for 4 types of qualification failures: plan document, operational, demographic and employer eligibility. I'm trying to figure out which bucket this situation fits in bes. Thanks

Partner set up and contributed to a 401k plan in her sole name as a self-employed person. Fortunately partnership had no common law employees so we're proposing to fix under VCP via retroactive adoption of a plan in the name of the partnership. Is this a plan document or an employer eligibility failure?

Unfortunately I can't prove a negative but perhaps an example will help. We probably agree that an unfunded employee welfare benefit plan paid from employer general assets that covers more than 100 participants is required to file a 5500. Assume you have a company that offers an FSA as its only medical related "benefit" (no group health/medical plan) that covers 150 employees. They of course are not using a trust to hold and disburse the contributions. Would you file a 5500 for this "plan"? I wouldn't because I don't think it's a "benefit plan" and view it as more like a payroll practice and tax gimmick.

Respectfully disagree that a flexible spending arrangement is a Welfare Benefit Plan under ERISA. There is no "benefit" being provided by the employer to the employees other than a tax gimmick. As additional support I would cite the fact that there is no 5500 reporting of the FSA which of course would be required if it was an employee benefit plan covering more than 100 participants.

The wrap plan document and SPD describe/disclose the ERISA welfare benefit plans maintained by the employer. The section 125 cafeteria plan (including the premium conversion feature, the FSA, and possibly a dependent care reimbursement arrangement) is a creature of tax law and in our experience is reflected in a separate plan document and SPD. To make the "premium conversion" feature work smoothly it's important to have it operate on the same year as the insurance policies but there's no reason the FSA needs to operate on the same year as the insured benefits.

Large employer dropping spouse coverage since not mandated under ACA. Does not appear to be a COBRA qualifying event for the spouses losing coverage but doesn't smell right, anybody have a different view?

The 2017 RMDs will be based on who the beneficiaries are on September 30, 2017. So if the account is still undivided then you're correct, use the life expectancy of the oldest beneficiary. But if the account has been divided then you're able to use the separate life expectancy of each beneficiary. The rule provides a nice grace period to do some after death planning and is particularly helpful where one of the beneficiaries is not a living person with a life expectancy (such as a charity)

There have been proposals to consolidate/simplify the various retirement savings programs (401k/403b/SIMPLE, etc.) but nothing concrete yet

Point of clarification- you don't need to execute and submit interims, each restatement incorporates the interims since the prior restatement (and we don't have any interims after PPA). Note to Below Ground- if the AA and OL you have is for TRA'86 you might try submitting those without the BPD to avoid having to find a TRA'86 preapproved document

Sounds like they need a cafeteria plan with a Flexible Spending Account rather than a Health Reimbursement Arrangement

Sounds like you need TRA'86, GUST, EGTRRA and PPA restatements. Usually the hard one to find is the TRA'86 (called back then "Regional Prototypes") and we have one in case you need it.

Is it April 15, 17 or 18? Thanks

This would be akin to new employer paying premiums for individual health insurance coverage which we know is a big no-no invoking the $100/day/person 4890D penalty. Tell the Buyer to pay the acquired employees enough additional pay to keep them happy until the new insurance kicks in.

You can't reduce the 60 day election period (you have to allow eligible employees to enroll during the entire 60 day period) but you can start contributions immediately following receipt of their elections before the end of the 60 day period

Accounting for partner business expenses that reduce SE income on the partner's individual returns is a universal and "unadministratable" issue, particularly in large professional partnerships and in my experience is simply ignored and "hope for the best". I've handled IRS audits of partnership plans and fortunately the auditors accepted the SE income on the K-1 and did not ask for partner 1040s. A partial solution might be to switch to a qualified profit sharing plan with every participant in their own allocation group so that some partners could legally receive more than 25% of earned income and if you did encounter a smarter auditor you might have a chance of passing (a)(4) even with varying allocation rates.

My experience with VFCP through Philadelphia office has been great (several late deposits and a worthless asset removal from plan)

Going in under VFCP before any investigation and jumping though all their hoops will result in a non-action letter (they don't have discretion) but as you're seeing they don't have to allow the same relief during an ongoing investigation.

Were you trying to use VFCP after the investigation had already begun?

Make sure you check your SEP document to confirm it can coexist with a 401(k) in the same year (IRS SEP form prohibits this)

Ideally prior year 5500 would have contained code 4R ("we ain't filing next year) but if it didn't you need to choose between filing current year with code 4R (my recommendation) or wait and see if you get a "where's your 5500" letter and then explain the situation. If it turns out you'll be back over 100 next year I'd just file for current year to keep the EFAST computers happy.

The DOL Voluntary Fiduciary Correction Program might offer a perfect solution to your client's problem IF the owner is willing to acknowledge a fiduciary breach and make the plan whole by "purchasing" the real estate from the plan for original cost plus lost earnings.

1. Generous employer provides post-retirement health benefits to retirees (pre-65 continued participation in group health plan, at 65 payment of Medicare Supplement and Part D premiums). Is there any reason these benefits would not be tax free to the retirees? 2. Same employer also pays premiums for a whole life insurance policy on each retiree until death. Is there any way this benefit can be tax free to the retiree and if not is the proper employer reporting to the employee a W-2 or 1099? Thanks

I'd be happy to provide a quote (757) 624-3003

For those that like to run projections of the net after-tax advantage of pre-tax retirement plan savings you might consider this possible scenario: Maximum Federal rate on wage, pension & other regular income 33% Maximum tax rate on business income from flow-thru entities not paid to owner(s) as wages 25% Exclusion from tax of 50% of interest, dividends & capital gains (making max tax on investment income 16.5%) So the self-employed doctor has the following choice: 1. Keep $50,000 of business income, pay tax at 25%, reinvest after tax at 16.5% tax rate on earnings 2. Put $50,000 into a PS plan (assume doctor is only participant), save current tax at 33% but ultimately pay tax on all distributions at 33% Some commentators say the results shift to favor option 1 even when you disregard the possibility of having to make contributions for eligible employees and pay plan administrative costs. Of course such a scenario would also need to consider making the $50,000 contribution as ROTH (immediate conversion of employer contributions to ROTH) which may result in ROTH becoming the game of choice for professional practices.