Belgarath

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...

Thanks. Cynical types report that there are some TPA's out there (none of them BL members, naturally!) that use every stratagem possible to keep participant and loan counts high so that they can collect more fees...

Just curious - how many of your plans permit loan repayments to continue following termination of employment? Almost none of ours do, on the theory that the employer doesn't want to mess with loan issues for ex-employees. However, I've seen some TPA's that have almost all of their plans allow repayments to continue after termination of employment. So, this is an unimportant question, just to satisfy my curiosity. I think our approach is more mainstream, but maybe not...

Only thing missing was the big, shaggy dog sitting in the corner of the owner's office. Great story, thanks for brightening my day!!

Perhaps you are thinking about the requirement for safe harbor matching plans? This requires that if the SH match is calculated on a payroll method, the matching contributions for a given quarter must be deposited by the end of the following quarter.

I claim no expertise in the area of Church Plans. However, I confess to being puzzled as to why they would even want to do this. Is it their intention that by doing this, they hope to make distributions from the 403(b) non-taxable? If so, then IMHO, it isn't valid. I won't go so far as to say you CAN'T have such a provision, but I doubt the IRS would approve it in a pre-approved document, and I'm dubious that it is permissible in an individually designed document. But even if you do put it in, and even if he IRS says it is ok, I still fail to see what it would accomplish? Maybe someone else can offer a more informed opinion.

I also have never seen a POA clause in the document. We've had a few POA situations, and it always goes to the Plan Administrator's attorney to make the determination as to whether it is a valid POA or not.

Sometimes people get this confused with crediting prior service for VESTING purposes. Perfectly ok to exclude service prior to establishment of the plan for VESTING. Not for eligibility, as WCC mentions. You might want to check your document 'cause I suspect that the exclusion for prior service may be for vesting.

Without doing any research, I'd vote for no BRF testing, unless perhaps there are special allocation conditions on the discretionary match.

Just guessing - it falls outside the pigeonholes, and it would require someone who actually knows something to do some extra work. I know in a prior life at a large corporation, reversing certain transactions could take two or three days, as each "step" had to go through overnight batch processing, then be checked the next day to make sure the system had properly updated, then do step two, wait overnight, etc... The service folks hated those.

So is there any reason, other than for withholding/pooled account issues, to need a TIN at this point? I've been trying to think of one, and I can't. My early training (one heckuva long time ago) was that you ALWAYS needed a TIN, but that was because 1099's and withholding were done in-house, and a lot of pooled account stuff. These days, it seems generally unnecessary. Especially now that to do it on-line, you have to have a "signature" and we wouldn't sign as the employer! (I haven't done this new on line form, but apparently you have to hold the mouse button down and actually "sign" the form.)

Depending upon the precise census/management/HC status and numbers, may also be possible to layer on a 457(b) for some or all of those folks who might otherwise blow the ADP test. I agree with the prior comments that in general terms, providers and investment options for 401(k) plans are far more diverse. Also, in general, financial advisors and CPA's tend to understand the 401(k) world better.