Belgarath

No, the 2% PS piece does not have to be 100% vested.

Could never pass 410(b) anyway - too many Red Sox fans in the world! (And those who AREN'T Red Sox fans really want to be - they just don't dare state it publicly...)

Thanks!

I'm taking a poll here. Since 403(b) plans are not subject to the 4975 penalties, late deposits of deferrals are not subject to paying the excise tax on a form 5330. My poll question is this - when you have late deposits of deferrals on an ERISA 403(b) plan, do you: A. Do nothing. B. File under VFC, under the approach that ERISA 502(i) applies. C. Other.

Suppose you have immediate eligibility for deferrals, but are in a classification (Red Sox fans) that is excluded from receiving an employer match. The language in 1.401(m)-5 would seem to say that you are not included in the ACP test, as you are not "eligible" to receive a match. Any other opinions?

I've never seen anything on this, which probably means it is ok. I haven't done any research, but just wondered if anyone knew if there was a specific exemption? In other words, generally if a qualified plan operates an active trade or business, the income derived from that business may be subject to UBTI. What about a ROBS plan, where the plan owns the stock, or nearly all of it, in the corporation? Does UBTI generally apply, or is there a special exemption? Maybe I'm out in left field on this to start with...

If I work .6 FTE, for example, can an employer limit my HRA reimbursement to .6 of what a full-time employee would receive? P.S. - I've seen several third party sources that say you can provide different levels of HRA benefits for, say, full-time vs. part-time employees, but have not seen any citation to official guidance.

I wonder if an IRS auditor would agree that this is a valid solution? I don't know the answer to that, but perhaps they would take the approach that since the contributions were actually made while under the dictates of the IRS Model SEP, that you can't rewrite history by simply adopting a prototype SEP after the fact. I'd consider this an aggressive (albeit possibly valid) approach. Wouldn't do it myself, but then, I'm a notable coward on these things.

I got an image of strange looking (but identical in appearance) Dr. Seuss creatures playing in a field, MOOPS and MOPES. "It's pretty hard telling the MOOPS from the MOPES, but the MOOPS play with hoops and the MOPES play with ropes." Or something equally ridiculous. I think I need therapy...

Kevin - FWIW, I have always understood that to mean (and I hope I haven't understood incorrectly all these years!) that you can't restrict the right(other than as allowed as you cite) for employees who are eligible under the terms of the plan. If, for example, you exclude leased employees from any participation in the plan, are you saying that you cannot have a safe harbor plan? That doesn't seem right to me. What you can't do, except within specified limitations, is exclude from the safe harbor anyone who is eligible to make deferrals. And a properly excluded class is not eligible for deferrals. Unfortunately, I don't have time right now to search for citations to support my understanding, or worse yet, to discover I've been wrong...

Ok, thanks. I was just curious if such scrutiny was applying only to "mega" plans, or if they were also applying it to smaller plans. Suspicions confirmed!

K2 - how large are these plans in terms of app. number of participants?

A different thought - is it necessarily goodbye safe harbor? The PLAN does not restrict anything. So the operational error must be corrected, (make up deferrals and match as required under the terms of the plan and the self-correction procedure) and then exclude them prospectively as an excluded class, assuming you can pass coverage testing. I'm no lawyer, but I'm assuming the terms of the employment contract can be modified with the agreement of all parties? Looks like Jpod and I were replying at the same time...

Yup. But in the meantime...

Maybe I'm missing something, but I don't see how a non-employee spouse as you describe can be allowed to participate/roll money into the plan.

Thank you. As I have stated before, I think the SAR is one of the most completely useless disclosures ever. Nevertheless, I couldn't find any basis to support not sending one in this situation.

I've always understood that these must be provided if you are eligible to defer, even if you choose not to. This is being questioned. I don't see any exemption as being available under the regs - I'm talking about an active, eligible employee, albeit with no account balance. Am I nuts, or missing something? Maybe just Monday fog...

You might try checking with a State or local senior center, etc. - sometimes there are programs where lawyers/CPA's etc. (some of them retirees as well) provide free assistance with tax filing for senior citizens. Your State/locality might possibly have similar programs to provide either free or reduced fee assistance. Worth checking into, and best of luck!!

I remember seeing, many years ago, a writeup by a "big name" accounting firm person that carryovers weren't allowed, and I kept a few notes. 404(a)(8)(C) provided that contributions satisfied the conditions of 162 or 212 to the extent that they did not exceed the earned income of the individual, so that contributions in excess of earned income were neither ordinary and necessary business expenses under 162, nor deductible under 212, and therefore nondeductible for ALL purposes under 404, including the carryover rules. Having said that, in the very limited number of such situations I've seen, rightly or wrongly the accountants carried it over and deducted it in the future.

Kind of an offshoot of an earlier question. Governmental non-ERISA plan (public school). Health FSA. Suppose you have a current plan year of 7/1 to 6/30. However, due to union contract negotiations, and some legal changes at the state level mandating certain changes, there is a one-time "disconnect" with making elections, and what is really needed is an election from 1/1/18 to 6/30/18, then getting back to an annual election from 7/1/18 to 6/30/19. Of course, they already have an annual election in place for 7/1/17 to 6/30/18. Now, this leaves you with (at least) two major choices. First, you can consider the union contract change as an allowable "change in status." I think this is a stretch, but one might argue that the new union contract represents a "commencement of employment." I don't buy it as a valid argument, but looking for any approach that might work. Second, and I think this is more valid, the plan could be amended to change the plan year to run a short plan year from 1/1/2018 to 6/30/2018. Then amend it back to a full year effective 7/1/2018. This would create two consecutive short plan years - one in 2017 and one in 2018. While I have heard that you can't have two consecutive short plan years, I haven't found any official support for that position. What I do find, in the proposed regulations under 1.125-1, is that a short plan year is permitted for "a valid business purpose." It seems to me that this combination of circumstances would certainly constitute valid businesses purposes, as the purpose is most definitely not to "circumvent the rules of Section 125 or these regulations." So this is the approach that I would say is reasonable, and SHOULD be defensible. I'd appreciate any and all thoughts. Any special holes/pitfalls I'm failing to consider? Etc.? Thanks.

I would normally be tempted to make a wiseguy remark, except that I have been humbled, many times, by doing things even more absurd. I well remember, back in the days when you had to do a handwritten fax cover sheet, when I actually wrote on the cover sheet, "If you don't receive this fax, please give me a call at ......" Fortunately, I noticed this foolishness before sending it, but the fact that I even came close is a sad commentary. There are other instances which I shall refrain from relating, lest I be fired from my hereditary post as village idiot. '

Agreed. My intent was rather to avoid publicly utilizing the appropriate pejorative terms applicable to the rogue DOL auditors.

"As far as the missing participants are concerned, the standard is "reasonable" search. I would argue it isn't reasonable to spend $1000 to find a participant with a $500 balance." At the risk of offending certain people out there, I would assert that anyone who isn't mentally arthritic would agree with you. For anyone who disagrees, you are more than welcome to your opinion. As to the fact that certain DOL auditors lack even a vestige of common sense, in the words of Mark Twain, "Let us draw the curtain of charity over the rest of the scene." 'Nuff said.

Yes.

Maybe not on the instructions, but on the form itself. From the Schedule R itself (I didn't bold it, it is bold on the form): Profit-sharing plans, ESOPs, and stock bonus plans, skip line 3.