spiritrider

It is the first withdrawal that determines the amount allowed to be rolled over. That can be in one contribution or many. The amount eligible to be considered a rollover is the lesser of the first withdrawal and the sum of all contributions within the 60-day period. If there are subsequent withdrawals, there is no ability to designate those as the funds eligible for rollover. The withdrawal money is fungible with all of the account owners funds. It does not matter if the money for the contributions came from the first withdrawal, subsequent withdrawals or any other source of funds the owner has.

This is usually the best solution to an excess contribution that was actually made in the year following the tax year. However, if instead the excess contribution was removed on or before 10/16/17, and no other contributions were made in 2017 for the 2017 tax year, there would not be an active SEP IRA for 2017. I agree with Mike Preston, that the best current solution is an amendment/restatement to a prototype SEP IRA plan effective 1/1/17.

First, a small correction for the OP. The employer can actually offer a plan that covers the spread between the minimum allowed deductible and the max OOP, not just between the HSA maximum contribution limit and the max OOP. This is a common plan and referred to as a post-deductible HRA and is similar to the concept of a post-deductible FSA. To answer jpod's post: This is not at all inconsistent with HDHP/HSA code/regulations. "Other coverage" is only disqualifying if it pays/reimburses before the minimum allowed HDHP deductible. These are 2017 = $1300 Individual/$2600 Family and 2018 = $1350 Individual/2700 family. Finally, while totally self-insured plans are usually only the province of very large employers, an HDHP/HSA/(post-deductible and/or limited HRA) can be very cost effective for the employer and beneficial for the employees. Self-insuring a higher deductible above the minimums and the maximum OOP will cost far less than having an insurance company do so. After all, the insurance company is making a profit. Many medium -> large sized businesses can benefit from such constructs.

A small business with a 401k becomes unprofitable. It terminates all employees, the business and the 401k. However, the business will receive payments for billed services for several months. This leads to a few questions: Does the successor plan rule apply even though the business stopped operations and the employees received all contributions due them? If the above answer is yes, can the owner adopt a 5305-SEP IRA (which is an exception) in the same plan year or must they adopt a prototype SEP IRA plan? Or is there no way to make employer retirement plan contributions on this residual income?

Typically, the IRS does not start sending out CP2000 notices until well into the second year. So if there is going to be any enforcement actions for 2016, they wouldn't typically show up until well into 2018 at the earliest. After all, we haven't even passed the extended filing date.

The 1000 hours is an additional eligibility restriction that determines whether the one year of service has been met. This restriction can not be greater than 1000 hours. This along with the < age 21 restriction can allow you to continue a one-participant 401k plan if any employees fall into these groups. This can be useful if the only employees you hire at least initially (hint, hint, hint), are part-time < 20 hours/week and/or < age 21. If you are going to use a self-administered one-participant 401k plan, this is not something to be casual about as pointed out be many others. So do not be lulled into a false sense of security because they seem relatively easy to set up. With the exception of an extremely small number of exceptions they receive, they are still first and foremost a 401k plan subject to the vast majority of IRS rules and regulations. This is definitely a case of what you don't know that can bite you in the butt.

What are the circumstances involved in the making of the excess employer contribution. The IRS has suggested that only things like arithmetical or clerical errors constitute a mistake of fact for returning excess employer contributions. I don't think what a dumb client presumed or assumed matters. Just because their employer contribution exceeds the deductible limit, I do not believe that makes it a mistake of fact.

Thanks, this is helpful. Based on the link to the DOL statistics, the percentage where the participants direct all investments for the 250-499 range of this plan, is ~90%. The board members and overwhelming sentiment of the employees that they want a new participant directed plan. It is the CEO who is the source of all the objections. He claims that the company would have to provide hours of training annually and this would make the board members liable. The word is that he is very tight with the investment advisors and thy are probably providing him with the objections. They have a lot of money (six figures/year) to lose. I appreciate your perspective and there isn't much to disagree with, especially the above sentence. Participants can be their owned worst enemy. The eight figure plan assets are invested entirely in individual stocks. The advisors have actually tracked their benchmarks pretty well. Trailing by less that 1%/year before expenses, but the plan administrative/recordkeeping cost are more like an additional 50 basis points.

Would anyone have a reference to the relative percentages of trustee vs. participant directed 401k plans. Short of that, anybody want to hazard a ballpark estimate.

How about something as simple as: 26 U.S. Code § 457 - Deferred compensation plans of State and local governments and tax-exempt organizations, (d) Distribution requirements, (2) Minimum distribution requirements A plan meets the minimum distribution requirements of this paragraph if such plan meets the requirements of section 401(a)(9). And if that is not enough see: 26 CFR 1.457-6 - Timing of distributions under eligible plans, (d) Minimum required distributions for eligible plans.

You do realize that with your very first post you have resurrected a zombie thread from two years ago.

You should definitely ask the question at the link provided, but I would be very surprised if the answer is yes. FOIA jurisdiction typically applies to the official acts of government agencies, bodies and employees. Your salary is just that. I would think your personal employee benefit selections are personal matters subject to privacy laws.

I wouldn't say it only works with solo plans. It really depends on the census and the propensity of NHCEs to take advantage. The last plan I had at a mega-corp did not match after-tax contributions and had to limit HCEs to 5% after-tax contributions. Cause and effect, I have no idea. However, allowing a match to apply to after-tax contributions might influence NHCEs enough for the plan to pass testing or at least allow some reasonable contribution percentage for HCEs.

Yes, the participant can rollover the after-tax basis to a Roth IRA and the taxable earnings to a traditional IRA. This will be a non-taxable rollover. While not stated in the quoted Q&A, the participant could also rollover the entire balance to the Roth IRA with the earnings subject to ordinary income tax.

The SEP IRA three and five years refer to the employee's employment not the the business. The 401k 1,000 hour limit is for determining of years of service, there is no full-time restriction. You should consult with a professional to determine with your employee's ages, work schedules and tenure/turnover what is the most appropriate plan. Also, the two types of plans and choices therein can have very different administrative costs, employee contribution costs and possible employer contribution amounts based on any given employer contributions.

Sorry, but you are going to be subject to the interaction of attribution and controlled group rules. I'll let the expert give you the details. However, I would think in the restaurant business you can exclude a significant percentage of your employees. Only eligible employees can participate and receive employer contributions. Employee eligibility requirements are: Are >= age 21 Have worked for the business in at least 3 out of the past 5 years Last time I checked they also needed >= $600 in compensation.

It is hard to get excited about the SS actuarial results to a hairbrained idea from a Senator. Wake me up when this actually gets recommended out of committee. That is if it has or will ever be filed as legislation. SS may not be progressively taxed, but the Primary Insurance Amount (PIA) calculation used for determining benefits is massively progressive. Not to mention this is going the wrong way for an insolvent system. Now if the dolt was asking what the long term projection of the trust fund with some or all of the following, that would be reason to be hopeful.. Raising the retirement age to 70 for those <= age 40. Raising/Eliminating the SS maximum wage base and/or raising FICA taxes.

Vanguard is most definitely a 5305-SEP plan. They even include an IRS Form 5305-SEP in their SEP IRA Kit. I believe it would technically be permissible to retroactively amend a 5305-SEP IRA plan to a prototype plan effective 1/1/17 and make a trustee -> trustee transfer to the prototype plan. Most mainstream providers are 5305-SEP plans, the only one with a prototype plan I am aware of in Schwab, although there may be others. I'm sure there are more knowledgeable members here with more answers

First, your plan to defer distributions is sound, because medical expenses in retirement are significant. However, a couple of small clarifications. Early retirement private health insurance premiums and Medicare supplement plans are not qualified medical expenses. On the other hand, COBRA, Medicare Part B/D premiums and LTC premiums are. Of course as are all out-of-pocket costs (deductibles, co-insurance, co-pays, etc..) for medical, dental, vision, etc... before and after Medicare. 1. Yes, your HSA can be used to cover an unreimbursed qualified medical expenses of you, your spouse and your dependents. However, be very careful. If she contributes to a general purpose FSA that can be used to reimburse your medical expenses (almost all do), this will make you an ineligible individual to make HSA contributions. 2. Note the bolded dependents from above. Once your son was not your dependent, his unreimbursed medical expenses are no longer qualified medical expenses for your HSA. However, there is a loophole. Because he is no longer your dependent, he is an HSA eligible individual as long as he does not have other disqualifying insurance. He is eligible for his own HSA account and he (or you on his behalf) can also contribute the full family plan limit. So generally, it would be best to keep him on your plan until age 26 unless there is real cost savings. 3. As long as you make her the beneficiary, your HSA becomes her HSA with all the distribution rights therein. The worst result is leaving an HSA to your estate. I also suggest you make your son a contingent beneficiary.

Sorry, but this section is very clearly written. The "less restrictive" "than these" from 2. clearly refers to the list under 1. For example: A. You could specify age 18 minimum instead of 21. B. You could specify minimum employment of one year of the last one year instead of 3 of 5. C You could have no minimum compensation requirement

While I have never seen this fact pattern, but the 1099-MISC instructions state this under exceptions: Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government. So it would appear that these payments should not be reported by the 3rd party administrator on a 1099-MISC. Now if and only if they were after-tax contributions, the retiree would still report them as other income, but take the deduction for the contribution. However, not if my response to 2. is correct. 1. The HSA custodian would report the contributions on a Form 5498-SA 2. Retirees can and many do participate in Section 125 plans. So if the employer routed these payments through their Cafeteria Plan. I would think they would be reported on a W-2 Box 12 Code W and the retiree would not take a deduction for this contribution. Maybe someone a lot more knowledgeable in Section 125 plans will chime in.

Now, I understand what you meant about the formula. I just ran those numbers through the 560 worksheet. The answer is $1,000. An even more interesting result is with $30K in net self-employment income and a $24K deferral including the full catch-up, you can still make the full employer contribution of $6K. I will edit my post that the correct formula from the steps 11&12 of the worksheet is (net self-employment income - employee deferral) / 2. Not including any catch-up. I always knew the catch-up did not apply to 415c dollar limit, I never thought about the fact that it is also not included in the 100% of compensation limit.

I would suggest caution when using solo 401k calculators on the web. This calculator as well as many others, do not properly handle the low income scenario I have outlined above. Vanguard's and Fidelity's caclulators do seem to handle this properly. This will cause an excess employer contribution to a 401k and it can not simply be removed as an excess contribution. I was able to help someone get it removed as a mistake of fact, but I was rather surprised the trustee agreed. I wouldn't want to rely on that. You really need either tax software or Schedule C, Schedule SE and the Deduction Worksheet for Self-Employed. This will take care of the scenario I have been talking about or when the self-employment is moonlighting income in addition to W-2 employment and the SS max wage base gets exceeded. Of course, even the tax software can not handle the case with 403b aggregation. Personally, I like the spreadsheet Solo 401k For Part-Time Self-Employment spreadsheet on the The Finance Buff's website. While I can not 100% vouch for it, I have tried many scenarios and it answered them correctly The thing here is not only does he handle the low income scenario and the moonlighting scenario, but he also handles 403b aggregation. Remember trust but verify. Excess employee deferrals are easily removed, but excess employer contributions are a mess you don't need

Please note any bolded edits. The previous version of this post was incomplete and in error when the deferral included catch-up amounts. I hope this post is not too long or detailed for this forum, but it was suggested I post this here. While the criteria of when the elective deferral > 60% of the net self-employment income causes the limitation in the employer contribution is not in any IRS document or calculation, it is the effective net result when no catch-up is used In Pub 560, the Deduction Worksheet for Self-Employed , lines 8-13, the (net self-employment income - employer deferral) / 2 (not including any catch-up), is compared with the straight 20% calculation and with applying the 415c limit. The lowest of the three values is used. My other way of looking at this is that the (net self-employment income - employer deferral) / 2 limitation will only apply when the net self-employment income - employer contribution reduction in compensation - employer contribution itself < employee deferral. This occurs when 100% - 20% - 20% = 60% < employee deferral. Therefore, this only occurs when the employee deferral > 60% the net self-employment income. For example, with a net self-employment income of $30K and an employee deferral of $18K, the maximum calculated employer contribution is $6K. $18K + $6K = $24K < $54K and ($30K - $18K = $12K) / 2 = $6K. The employer contribution is not limited. For example, with a net self-employment income of $25K and an employee deferral of $18K, the maximum calculated employer contribution is $5K, ($25K - $18K = $7K) / 2 = $3.5K. The employer contribution is limited from $6K to $3.5K

For the self-employed person and only the self-employed person, there is one situation in a 401k where employee deferrals can impact employer contributions. Net self-employment income = Net business profit - 1/2 SE tax. Maximum employer contribution is normally = net self-employment income * 0.20. However, if the employee deferral is > 60% of the net self-employment income, the maximum employer contribution is (net self-employment income - employee deferral) / 2. In 2017 this occurs when you take the maximum $18K deferral and your net self-employment income < $30K or $24K/$40K respectively if age >= 50. See IRS Publication 560, Deduction Worksheet for Self-Employed, steps 11 - 13.