Belgarath

Is it allowable for an employee to purchase an individual dental insurance policy through a cafeteria plan? I'm having a hard time finding clear guidance on this question. Any cites, if you happen to have them, would be great! Thanks. I'm attending a cafeteria plan seminar in May, which will hopefully help to educate me so I won't have to ask quite as many stupid questions.

For the strongly correlate with good administrators: You have to be insane (and by the way, insanity is inherited - you inherit it from your children). You have to enjoy the taste of crow, since it will become your principal food source. You must not be easily distressed by chronic foot-in-mouth disease. You must accept Dante's inscription, "Abandon all hope, Ye who enter here." An appreciation for perverse/bizarre humor is strongly advisable. You must be prepared to jettison ANY vestige of an ego. For contraindications: A sincere belief that employers generally have the best interests of their employees at heart. A strong belief that any major political party will improve the qualified plan landscape and working conditions. A conviction that you are always right.

I agree with RBG.

I'm not sure what you are specifically referring to. Is this for services performed IN the U.S.? If the income is exempt under a tax treaty, then yes, probably excludable. You might want to take a look at IRS Publication 519, which has a lot of information on this stuff. Also see 1.410(b)-6(c)(2).

The statutory exclusion is for nonresident aliens with no U.S. Source income. Since you are talking about resident aliens, who have U.S. source income, or who do have U.S. source income that is exempt from taxation under an applicable tax treaty. Since you are talking about a resident alien, then I don't think the exclusion applies. So yes, I think they are considered for eligibility purposes.

Yup - I looked it up afterwards and realized that I had it bass-ackwards. Thanks. Just one of the many reasons I'm not a DB person.

I get 160,200, which is probably wrong, wrong, wrong. I'm going to wait to see what those who actually know DB plans come up with, because I embarrass myself enough on these boards already, and I am decidedly NOT a DB person. I don't know how you actuarial types do it.

Right, you can't use it for a plan that uses current year testing.

It is indeed obnoxious, ridiculous. asinine, and any of a number of other pejorative terms that you might care to employ. What is the point? Or to quote Basil Fawlty, "What is the bloody point?" I couldn't begin to imagine. I just know that's what the regs require. At a guess, and only a guess, this restriction only applies to custodial accounts because in the dim and distant past, 403(b) were annuities only, and so when this provision was instituted, annuity contracts were "grandfathered."

Thanks. I had already asked for more details, so we'll see what is really happening once additional details are communicated.

Another oddball. Dr. has a practice. A clinic purchases his practice, and hires him or her as an employee. Clinic pays the Dr. large quarterly payments for a year, based on large revenue from Dr.'s former clients. Apparently, this is "run through" payroll, but I have no details of what that means yet. First, it seems odd that these would go through payroll under any circumstances - seems like they would normally have been 1099 payments to the prior entity. But what I think doesn't matter. Since being "run through" payroll, and plan defines compensation as W-2 wages, wouldn't these be considered for purposes of employer contributions?

So, suppose someone has a split dollar insurance arrangement with their employer. Reaches normal retirement age, and is eligible to have the life insurance policy distributed. Is this treated as "wages" for purposes of contributions to a qualified plan? While distributions from non-qualified deferred compensation plans are generally considered includible for W-2 purposes, if it is a distribution of a life insurance policy, I don't see how any withholding could be done from payroll. I suppose it could count for purposes of an employer PS or SH non-elective. Anyone dealt with this before? P.S. - if instead, the policy is surrendered and the cash value, or a portion thereof, is distributed to the employee instead of the policy, then I assume it would be treated as wages. But in either scenario above, if the only way the employee can receive the benefit (policy or cash) is to terminate employment, then this would be ineligible "post severance" compensation, and not included for plan purposes?

Based purely upon what you are showing here, I'd say no, But there could be a whole lot of other "stuff" in your document somewhere that would permit it. What you have here is a safe harbor "maybe" option, but in this section as shown, there is no option to reduce or exclude the HC. I would check the rest of your document carefully to see if what you are looking for is available.

No, that's no longer a requirement. The IRS required this for the EGTRRA prototypes, but did away with that requirement for the PPA prototypes. Now, I suppose it is theoretically possible that someone still retained this provision in a document, even though not required, but I don't know why anyone would...

Well, it is an operational error, so theoretically, the IRS could disqualify the plan. It strains credulity to think that the IRS would do this, but they might impose some sort of penalty. I agree - I don't see what else you could possibly do other than to get it cleaned up and have it done right in the future. Of course, with something in the files to document the changes in administrative procedures to prevent it from happening in the future, as with all self-corrections. I suppose you could do a full-blown VCP filing to retroactively amend the plan to conform to actual operations, but that seems crazy to me. I sure wouldn't do it...

You might. The cleaning service, the garbage collection folks, anyone with whom you contract who does a great job, and you wish to express your appreciation for service above and beyond the call, etc.

One other observation, which may or may not be important depending upon the client's wishes for plan design. If they want to allow in-service distributions of employer contributions, especially for hardship (and many do) then the 403(b) is useless when using custodial accounts. You can't take in-service distributions from employer contributions to 403(b) custodial accounts unless disabled or age 59-1/2, whereas under the 401(k) you CAN allow in-service distributions on the employer contributions. P.S.- I'm ignoring the possibility of 12/31/88 funds for purposes of my general observation above.

I suppose it might make a difference if the commissions are for a commissioned salesperson, where ALL of their comp is based on commissions, or if it is an occasional thing. I don't think there is a hard and fast rule - just facts and circumstances. But under your description above, if commissions are not excluded under the compensation definition of the AA, then the client has to include them regardless. In other words, if they aren't excluded under the normal definition in the AA, and the Administrative Procedures section says that irregular pay is used for deferral purposes UNLESS the participant makes a special election, and the participant hasn't made such a special election, then the fact that the comp might be "irregular" is immaterial.

I'd first cycle back to Mike's comment. So what's the scoop on when your document provides for use of forfeitures? Ours, for example, provides that they must be "disposed of" no later than the end of the Plan Year following the Plan Year in which the forfeiture occurs. If the forfeitures aren't being used to pay expenses, but are allocated as of 12/31/2016, I'd count 'em. If not used until 2017, then I wouldn't.

See 1.415(c)-2(g)(8).

Haven't seen any of the movies. My policy is to never watch a movie made from a great book. No movie can match the experience of great books, even though the movie might be objectively great. And although I've heard rave reviews about the movies from my kids, I've also heard enough to know that the movies (as they all do) take certain liberties and deviate from the books, which I find most distressing.

BG - what version are you using? I can't get to the "Measuring tool" you refer to. But then, I'm what would politely be referred to as "challenged" when it comes to anything with my computer...

True - I know this has been debated over the years, but "most" people in my experience take the same interpretation. "Go not to the elves for counsel, for they will say both no and yes."

Hey Tom - just to nitpick a little so newbies aren't confused - I'd say that if hired 7/2, then 1 year of service is completed 7/1, not 7/2. This can be a big deal for Entry dates that are "coinciding with or next following." I'd also say that someone hired 12/30 completes 1 year of service on 12/29, not 12/31.

That's one of the more bizarre statements I've heard in a while. No, you aren't missing anything. I have to wonder if there is more to it - is this just what the participant is telling you the CPA said, or is this the actual "verdict" of the CPA? If the CPA is really saying this, I would ask for the CPA to produce citation to support that statement...