Belgarath

Reviewing a takeover plan, and found what seems to me to be a bizarre (and inapplicable) provision. This is a PRIVATE college - non-governmental in every way. The adoption agreement defines, for faculty only, compensation as including "Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions." This wasn't a mistakenly checked "box" but was specifically drafted into the compensation definition. As I read 414(h)(2), I don't see how it can possibly be applicable in this situation. Am I missing something obvious here?

Hey Austin - don't know if this will help - I just skimmed a couple of questions, but I did note that a SCHOOL may have to pay Davis-Bacon wages in some circumstances. There is tons more information here, but I didn't take any time to look. https://energy.gov/sites/prod/files/2014/10/f18/DBA FAQs for Posting.pdf P.S. - here's one of the q & a's: Q: Are non-profit corporations subject to DBA? A: For purposes of DBA, non-profit corporations are treated the same as for-profit corporations. Therefore, when performing work on government-funded projects, the non-profit must pay its employees the DBA prevailing wages.

403(b) plan for a 501(c)(3) organization - now owners. A highly compensated employee terminates on, say, 12/31/2015. Receives a last paycheck in early January of 2016. A deferral is withheld from that final paycheck in 2016. Plan has a last-day requirement for match, so no match received on that 2016 deferral. When testing for coverage/nondiscrimination, is he counted as a HC for 2016? Or since he formally terminated employment on 12/31/2015, is he not considered HC for 2016? P.S. - don't waste any time on this, as it is purely "idle" curiosity - didn't have any effect on any testing, etc.

A plan is permitted to use partial year compensation for Gateway purposes, assuming the comp definition otherwise satisfies all requirements. 1.401(a)(4)-8(b)(1)(vi)(B)

Note, however, that such tax-free rollover treatment does not apply to any offset amount under a loan that has already been deemed to be taxed as a distribution under the Code (and reportable on Form 1099-R) either because its terms did not comply with the Code or because it remained in default past the plan’s default cure period. It may seem ridiculous of me to mention this with all the cognoscente on these boards, but since I've received questions on it already, thought I'd toss it in.

Chip - If you want a citation, see 1.401(a)(9)-5, Q&A-9.

"On the other hand, when a plan, including a pension plan, provides a benefit the availability of which is conditioned on a finding of disability made by a party other than the plan, (e.g., the Social Security Administration or the employer’s long-term disability plan), then a claim for such benefits is not treated as a disability claim for purposes of the Section 503 Regulation" My question on this is: many plans say that the determination of total and permanent disability will be made by a "licensed physician." But I'm presuming that in many cases, this physician will be chosen by the Plan Administrator. With that discretionary authority, I'm afraid that it then falls under this blasted regulation. Any thoughts on this? Sorry about the small font...

I suspect she is thinking of Appendix B, .07. But my take on all this is that yes, you are permitted under that same section .07 (3) to correct the early inclusion of otherwise ineligible employees, BUT, this doesn't override the normal timeframes for SCP. So assuming you consider your error significant, then I think you must file under VCP.

It might. Suppose the plan uses comp from date of participation - your 3% safe harbor won't satisfy top heavy if you became eligible for the SH mid-year.

"Exempt" is a word I don't like to use on this issue. If the plan meets all the requirements, it is "deemed" not to be top heavy. Probably just semantics, but even such a plan could be subject to top heavy if, for example, eligibility is different for deferrals and Safe Harbor contribution. P.S. - you may find Revenue Ruling 2004-13 helpful. https://www.irs.gov/pub/irs-irbs/irb04-07.pdf

Nothing. The fog burned off. Thanks.

Nice. However, I want to find out where you can get a hotel room for 3 people for $30.00, just so I can avoid that neighborhood!

Gracias. It's just always easier when there is a cite, so I was hoping there was something I had missed. But I've had my coffee now, so I can't blame anything further today on the fog...

Hey Tom - I'm not trying to accomplish this. Someone else is trying to accomplish this, and I'm saying it can't be done. I just wasn't finding a "prove it to me" citation.

Seems like a simple question/answer but I'm not finding the citation I want to back it. For purposes of this question, let's ignore proper loan limitations. So, you have a 50,000 account balance, and you take a 50,000 loan. Now you want to rollover 50,000 from your IRA to the plan to repay the loan. All money is pre-tax. Problem with this is you just got 50,000 without ever paying tax on it, nor will you, since the loan is now repaid. Must be post-Super Bowl/Monday fog, but I'm not finding the correct citation. Any bright ideas?

Really a matter for tax/legal counsel, and depending upon the costs/risk associated with various options. Could, for example, simply terminate the plan, and hope no audit. Or amend and restate to a PS currently, and hope no audit. Or do a full-blown VCP filing, under which various options might be pursued. One-person employers do seem to have a particular genius for finding old documents once they understand how important it is...oddly enough, they are usually the correct documents, timely executed, etc., etc... - amazing. Has he filed 5500 forms as required?

Thanks Lou. I don't even know what code was used on the 1099 - haven't seen it. Question was from an advisor but not on one of our plans, so I was looking at it in a general sense. I will suggest they check the 1099 codes to see if it was completed correctly. Happy Friday!

This is the 72(t)(2)(A)(v) exception. Any reason this wouldn't apply to a loan offset distribution (not a prior deemed distribution) upon termination of employment? I don't see any basis for saying this wouldn't apply, but we have a State tax department giving someone a hard time, so I thought I'd see if I'm missing something... Thanks.

And this brings it squarely back to the determination, made by the employer, of whether the employment relationship has terminated, and if so, when. Let us suppose that the employee, on December 15th, says, "I quit, today." The fact that there is now 4 weeks of accrued vacation time that must be paid does not make this person an employee on December 31st. On the other hand, if the employee simply goes on vacation on December 29th, and then never returns, (like Charlie on the MTA, for you other old-timers) what is the termination date then? I'm no labor lawyer, so I don't make the determination - it is up to the employer to do that. I agree with everyone that facts and circumstances can be tricky, but it is still the responsibility of the employer to make that determination, and then to inform us of the correct termination date. I promise not to say anything more on this subject!

Ignoring additional restrictions on the timing of amendments to a safe harbor plan... In general, it is permissible to amend a plan such that someone who is already a participant may now no longer be a participant. (As long as normal statutory eligibility requirements are not violated.) The anti-cutback provisions of IRC 411(d)(6) only protect benefits already accrued. It does not necessarily guarantee a right to accrue future benefits. The "right" to continue to participate isn't a protected benefit, and as such, may be eliminated - again, subject to normal statutory requirements. In my experience, such eligibility changes are almost always "grandfathered" as a matter of good employee relations, etc. - but it isn't a requirement.

I agree with Larry. As I said, we often question it with the employer to have them confirm one way or the other, but it is their call, and we go with what they decide. Of course, in many situations it doesn't make any difference one way or the other, and then we wouldn't normally bother to check.

As opposed to the first day they were only PARTIALLY dead.

Actually, we would do the same as Calavera - I just didn't take it that far in my initial response. We would go back and question if 12/29 is really the date they want - if so, then their initial certified termination date stands - if they want to change it to 12/31, we'd ask for written verification of the new termination date. As per the terms of our service agreement, we are perfectly within our rights to rely on the certified census and not question it, but as a matter of service, we do.

I'll take the opposite approach - if we receive a census stating that the date of termination is 12/29, we would not consider them employed on the last day of the plan year.

Valid rollover meaning a valid rollover to any allowable arrangement - IRA, another or same qualified plan, etc. Some plans allow direct rollovers, but do not accept "60 day" rollovers. I have no opinion as to whether "better" to roll back into the distributing plan (if allowed) or to an IRA. 10% premature distribution penalty does not apply if the rollover of the full amount is accomplished within the 60 day period, as there is then no taxable distribution.