Belgarath

I'm with Kevin on this.

Well, my understanding has always been that you can ALLOCATE it for the prior year as long as you make the contribution within 30 days after the expiry of the 404(a)(6) period. So in your case with an extension to 9/15/2018, you could contribute the PS contribution for 30 days after the extended deadline, and ALLOCATE it for 2017. Then you'd deduct in 2018. See 1.415(c)-1(b)(6)(i)(B).

Yes, Revenue Ruling 72-509. I'm not aware that this has ever been made obsolete, although it is just plain stupid... I will say that this "rule" is flung down and trampled upon quite frequently in the real world...

Yeah, this was an issue in "ancient times." Revenue Ruling 81-114 officially recognized this, and referred to Dejay Stores, Inc. v. Ryan, and Tallman Tool & Machine Corp. v. Commissioner. Not a requirement for a VERY long time. Prior to 81-114, it was an issue under Revenue Ruling 57-419. No worries! It doesn't HURT to contribute a nominal amount, but seems pointless and unnecessary to me...you can refer the actuary to the citations, but if you need to keep 'em on your side, certainly ok to contribute if they insist.

I've never seen a fee this high. If the maximum participant loan allowed by the plan is $5,000 or something like that, then maybe ok.

Thanks all. Now, suppose he doesn't repay the loan. Can he still take the full 15 years to repay it? Or must it be renegotiated for a 5 year period? I've seen different opinions on this - personally, I don't think the Plan Administrator has a legal duty to follow the results of the loan, as long as it was properly documented and granted as a legitimate home loan. However, the EOB indicates that "best practices" would require a Plan Administrator follow-up, and the loan should be "recalled" or restructured for 5 years. This is in line with Qdrophile's comments. I don't think that happens much in real life, however.

What kind of fee? Do you mean something like a TPA or recordkeeper fee of $75 to originate the loan?

This happens sometimes. Let's assume the individual promptly repays the loan amount, plus interest for the few days he had the funds. Now 2 months later, set to buy a house again. Would you treat the first loan as "never happened" for purposes of the subsequent loan limits, or would you treat it as part of the highest outstanding balance in the last 12 months? I lean toward to former, as the latter seems to produce a truly unfair result, but one could argue that the latter is more technically correct. Opinions?

Many thanks!!!

Thanks ESOP. Last question: To put a number on this to see if I'm understanding properly - suppose the SAR provides that I will receive a cash payment at the end of the year, based on any appreciation in stock price for that year. There are 100 total shares, all owned by the ESOP. And for sake of simplicity, all shares have been allocated. No family members, etc. Stock price as of 1/1/2018 is $10.00 per share. My ESOP account has 9 shares. Stock price as of 12/31/2018 rises to $20.00 per share. My 9 shares entitle me to a cash payment of $90.00. So $90.00/current stock price of $20.00 = 4.5, so my "synthetic equity" is 4.5 shares, giving me a total of 13.5 shares. Is the calculation then 13.5/100 = 13.5% so I am now a "disqualified person" or is it 13.5/(100 + 4.5) = 12.9% (still a disqualified person, but sometimes the math might work out so that I'm not)?

Thanks to you both. Question - how do these SAR's work with regards to stock - by that I mean - suppose the S-corp has 100,000 shares of stock. All are currently owned by the leveraged ESOP - either already allocated or in suspense to be released each year as the loan is repaid. So if a SAR's plan is instituted, does that mean more stock is going to be issued at a future date? Or is it essentially a cash bonus (paid at whatever time or times or conditions specified in the SAR's agreement) based upon the stock price of existing stock already in the ESOP? Etc.? Assuming it is a cash bonus, and not an actual stock purchase right, then it still counts as synthetic equity, but may or may not be includible in current W-2 income, as it might essentially deferred compensation? All this will go before an ESOP attorney anyway, but I'd like to have a reasonable working understanding of it. I can see I'll have to do some research, but in the meantime I greatly appreciate your expertise!

So suppose a S-corporation has an ESOP that owns 100% of the stock. The employer is considering implementing a "SAR's" plan. Does this SAR's plan have any impact on the ESOP? What little I know about a SAR's plan is that under some circumstances, it MAY(?) be possible that they would be considered a retirement plan, and therefore issues with 404, 415, etc.? Let's assume for the moment that this isn't a problem. Seems like this could be considered compensation, which might indirectly affect the ESOP? I guess what I'm getting at is that it doesn't seem like there is a DIRECT effect on the ESOP, but that depending upon the status as to whether it represents currently taxable W-2 income or not could have indirect effects? Would love to hear any thoughts - I'm frankly not familiar with Stock Appreciation Rights programs. Thanks.

Yes, if the property is unencumbered, and if the contribution is purely discretionary. If property is encumbered, then the IRS treats it as a sale, and therefore a PT. You generally can't contribute property to satisfy a funding obligation (i.e. for a pension plan). There are some exceptions under the PT rules that would allow non-cash contributions to a pension plan in certain circumstances, but I try to avoid looking at that stuff unless absolutely necessary...and would refer them to counsel anyway!

Ditto for me. Gracias!

Yes, that's precisely what I see. Liked it better the old way.

Atavism at its finest!

What district are you in? We, thankfully, have not yet seen any uptick in audits. Hope it stays that way!

As far as I know the term "governmental" entity has not been clearly defined by the IRS or in ERISA. The IRS issued proposed regulations, and this was supposedly going to be coordinated with IRS, DOL, and PBGC so there would be consistency, but I'm not aware that they have been finalized. If you have access to the EOB, Sal has a great discussion of this. In the meantime, this might help. https://www.federalregister.gov/documents/2011/11/08/2011-28853/determination-of-governmental-plan-status

Awful. Absolutely awful. I hope no one apes your proposal method.

FWIW, FIS docs do have such language.

Yes, I don't think I'm qualified to be considered a higher primate. But tell me this - did you marry the gorilla your dreams?

Fascinating! Thanks Tom. This is WAY more interesting than nondiscrimination testing...

Agree.

IF the only contributions to the plan are deferrals and safe harbor match, then the plan is deemed not to be top heavy, so no TH contributions whatsoever. If other contributions are made, then you lose the TH exemption, and if plan top heavy, depends upon your document. While most exclude Keys from receiving TH, some provide for TH for everyone. So if TH becomes applicable, check your document (or check it now, and amend if necessary to prevent TH to Keys, if that is what you want to do).

The match is dollar for dollar up to 3% of calendar year income. The 401(a)(17) compensation limit doesn't apply for purposes of the MATCHING contribution. If 'twere me, I'd wait and do a true-up at the end of the year once final comp is known. There's no requirement to deposit it per payroll - that's just an accounting/bookkeeping/payroll convenience/procedure.