Belgarath

Thanks. They did actually do a notification each year - just not a model notification. It was more of a paragraph on their annual benefits notifications/elections. This is according to the accountant - I have not seen any of this documentation, so my knowledge of the situation is based upon a phone call only. The submission is indeed using a shoehorn to fit it into the most reasonable "pigeonhole" in the SIMPLE submission documents, but I don't see where anything else really fits, either. I don't know what other "fix" could possibly be done, anyway - you have a plan with no document, you adopt a document! Of course, I can't guarantee the IRS will accept it without asking for the documentation you have mentioned - and of course there was no SPD (the modified "SPD" normally required for a SIMPLE) but you can't retroactively provide an SPD anyway. I doubt the IRS would disqualify the arrangement - I'd like to think not...

So, employer apparently operated a SIMPLE-IRA plan without ever completing and signing a document! Quite a trick. Anyway, when submitting for correction with a 14568, Schedule D, they ask for a copy of the current document. Since this isn't possible, obviously, I presume you would just include this in the narrative that there isn't an existing document. Anyone ever done one of these, and had the IRS request anything additional? Thanks,

FWIW, we have now received a DRAFT document from our provider. Major changes are not anticipated, but it ain't over 'till it's over. At this point, it retains the provision that for an ERISA plan, "once in always in" for purposes of the 20 hour exclusion.

FWIW - I would call this a fringe benefit. Unless it is through a cafeteria plan or something, then I believe the IRS would be consider it a taxable fringe benefit, but I haven't specifically reviewed whatever publication addresses fringe benefits. https://www.irs.gov/publications/p15b/ar02.html

To be more specific - a plan is not treated as failing the 401(a)(9) requirements solely because it fails to make an RMD during the period when the QDRO determination is being made, so long as the period does not extend beyond the IRC 414(p)(7) period. 1.401(a)(9)-8, Q&A-7.

Only one problem with that theory, Tom. The IRC was produced by Congress, and monkeys are WAAAAYYY smarter!

I haven't actually seen a situation where the IRS nailed someone for a "late" safe harbor notice, but then, we always get ours out on time - although I can't guarantee that the clients actually do the same! Has anyone seen, or do you know of, a "real life" situation where they stuck it to someone on this? I'd like to think they would be generally reasonable - particularly if the safe harbor is the 3% nonelective. Just curious...

Perhaps I'm misreading your question, but I'm confused. Since all was contributed in 2016, there shouldn't be any excise tax for 2015. (Now, they may have to re-file their 2015 tax return if they took a deduction for a contribution that wasn't made in time, but that's a separate issue.) They will presumably deduct it when they file their 2016 return.

FWIW - I checked with an ERISA attorney on this, who agreed with me.

"Solo-K" is purely a colloquial term, usually used for marketing purposes. But to answer your question, if only the sole owner has satisfied eligibility requirements, then it is a "one person" plan for purposes of the 5500 filing requirements.

I'm looking at an amendment to a 403(b) plan - not our document - and I'm finding the wording puzzling. Or maybe I'm just reading it wrong. It says: "Notwithstanding the provisions of this Section (I've deleted the section numbers to preserve some semblance of anonymity to the document provider)..., pursuant to the direction of the Employer, as Plan Administrator, if the value of the terminated Participant's accounts that is attributable to non-Roth contributions (including his Rollover Account, if any) is not greater than $5,000, the terminated Participant shall receive a distribution of the value of the entire vested portion of such Accounts attributable to non-Roth contributions and the non-vested portion shall be treated as a forfeiture." Now, what this is supposed to mean may not necessarily be what it says, or what I read it to say. But to me, it seems to be saying that you are completely excluding Roth accounts when determining the $5,000 threshold. I don't think this is correct or allowable under 411(a)(11). For example, if you have $4,000 pre-tax and $4,000 Roth, you can't force out the $4,000 pre-tax. (and what good would that do anyway???) I wonder if perhaps, instead, this is really meant to encompass the guidance in 401(a)(31)(B), and 1.401(k)-1(f)(4)(ii) where the $1,000 threshold is applied separately to Roth and non-Roth? Maybe I'm just tired, but this one has me scratching my head. Thoughts? Thanks!

I believe you can do this using the Relius webinars through a "Qualified In-House Training Program." You would be the "Registrar" and would have some sort of an attendance form, listing the seminar, date, number of minutes, etc, where you certify that "Whoever" was in attendance for the duration of the time indicated. They would keep this form, and self-report the credits. I don't know if you have to actually "register" such a program with Relius or not - you should probably contact them. Sorry - they are FIS now.

I agree, but I'd note that the "definitions" are in fact frequently turning on "facts and circumstances" and it can sometimes be a difficult call - as evidenced by substantial litigation in this arena. Certainly I agree that someone other than the TPA should be making this determination!!

Very clever! Your heart may be three sizes too small, but the brain is full sized. (I carefully did not say the brain is "normal")

I happened to find the following item that I posted in a "Humor" conversation back in 2014. How could I have foreseen the horror that awaited (actually, since the Red Sox choked in the playoffs this year, I'm glad the long-suffering Cubbies won). But just wait 'till next year!!! "What's a Cubs fan? I thought the last big asteroid strike made them extinct."

An employer has asked if a Medicare premium reimbursement can be "run through" a cafeteria plan on a pre-tax basis? This will display my ignorance in this arena, but it seems to me that while it may be possible to have a Medicare reimbursement program if the requirements of IRS Notice 2015-17 are met (i.e. those enrolled in Part B or D are offered health coverage that is minimum value and not solely excepted benefits) that it couldn't be pre-tax through a cafeteria plan? Or is that incorrect? I'd appreciate any thoughts on this. Thanks!

"When it comes to a qualification issue (Belgarath): How to you address the fact that you have a transaction that basically undermine the entire premise of your plan being established to provide a retirement benefit?" This is probably the only piece of this whole issue that I think is simple and straightforward - the IRS absolutely permits the use of "seasoned" money, and it is still routinely found in IRS pre-approved prototypes/VS documents. As far as I'm concerned, it isn't a qualification issue. The IRS will not disqualify a PS plan if you properly applied the 2/5 rule. As to the philosophical discussion of what the proper purpose of a PS plan should be, I decline to enter that debate. As to the rest, not necessarily so simple (at least as far as I'm concerned) and as I said, I don't have to deal with it any more. I think we have maybe three old takeover plans where life insurance is even permitted as an investment, and only one plan with a very old policy still remaining. Hurray!!! Signing off this one, as I have nothing useful to say (not that this is any change from normal...)

FWIW, my interpretation in the absence of specific document language would be all compensation for hours on which overtime pay is included. If you are getting overtime pay on all hours over 40, then to me, all of those hours are overtime, and you would exclude it all, not just the extra 50%.

Bill - certainly not saying you are wrong. There's a good argument for that position being technically correct. But I will say this - in a prior life with an insurance company, that company and many, many others didn't agree with what we termed "The Holland approach." As far as I know, Holland's interpretation was never adopted as official policy by the IRS, and I never saw imposition of taxation in that situation on audit where the 2/5 rule had been utilized. Maybe just lucky... Of course, I've been out of that for a long time, and it may have changed. I thankfully no longer deal with these issues, and I don't miss it!!

Agreed (I'm assuming this isn't a Church plan). For reference, see 1.403(b)-5(b)(4)(iii)(B).

Thanks for the responses. We're responding via a faxed letter - my experience with phone calls (holding forever, then getting someone who doesn't know a darned thing) is horrific. Once in a while it works, but avoiding that route on this one. Will be interesting to see how quickly or slowly it gets fixed.

They try hard, but they just can't ever seem to get things quite right. I recently (August 29th) submitted a delinquent 5500-EZ filing (years 2005-2015). Naturally, each form had the required wording on the top of each form, and the full penalty of $1,500 was submitted, etc., etc.) No 5500 forms were ever filed for this plan prior to this. So, now that they have "entered" it on their system, they generated a CP283 Notice assessing an $800.00 penalty for the 2015 form being submitted late! Gotta love it...

I don't think you will find statutory or regulatory authority for this position. Waaay back, maybe in the late 1990's or early 2000's, an IRS representative put forth this theory at an ASPPA conference, but as far as I know, there is no supporting guidance, and opinions from the podium are just that - opinions. Official guidance appears to only require taxable term cost be paid, even on the excess. Now, I don't know whether the IRS does, indeed, take this position and whether it has ever been litigated. Hasn't to my knowledge. The worse outcome is that exceeding the incidental limits is a qualification issue, and the IRS COULD disqualify the entire plan. However, I believe this can be corrected under EPCRS (Revenue Procedure 2016-51) but I thankfully haven't had to deal with life insurance in pans for several years now, so you'd want to look that up.

But make sure you first confirm incidental limits were actually exceeded. Plan may utilize 2/5 rule if participant was eligible for it.

Great, Tom - so now it'll be, "Every Who down in Whoville, the bigly and the small..." I know, I know, that isn't the meaning you presented. But since you are Grinchifying this board...