Tom Poje

I dug back through my old files, blew off the dust and stuff, and found my sheet that adjusted things. I only adjusted the TWB on this version. (In this example it made a whopping difference of a little less than $2 in FICA (but that is using full TWB). (calculation in blue) as I recall, certain people on this board said they didn't even bother changing their spreadsheet, saying it wasn't worth it. ideal salary adjusted.xls

oh joy of joys guess I will wait for someone to build this into the spreadsheet if this goes through for 2018! https://www.ssa.gov/OACT/solvency/TCotton_20170601a.pdf Thank you for your letter of April 12 regarding the implications for Social Security of reducing the employee portion of the payroll tax. The proposal would cut the payroll tax rate by 2 percentage points on Social Security-covered earnings up to: · $28,258 for workers filing an individual income tax return, · $56,512 for a married couple filing a joint return, and · $28,258 for a married worker filing a separate return. The proposal would reduce the employee portion of the payroll tax rate from 6.2 to 4.2 percent on annual earnings below the applicable threshold; the employer portion would remain at 6.2 percent. The tax rate for self-employed workers would be reduced from 12.4 to 10.4 percent on annual earnings below the applicable threshold. The dollar levels indicated above would apply for tax year 2018, with the thresholds increased by price inflation after 2018; that is, by the annual COLA increase percentage determined for December of the prior calendar year. As we have discussed with your staff, this tax rate reduction would be implemented by way of a credit associated with the workers’ income tax filings. The reductions could not be efficiently applied in payroll withholding for at least two reasons. First, the employer would not know for certain the tax filing status the worker will use for the year. Second, for individual workers or married couples with more than one job during the year, it would not be clear to which job’s earnings the reduced payroll tax rate should be applied. As a result, the reduction in payroll tax would be received in the form of a credit included in workers’ federal income tax returns for the year.

what is so special about this particular investment that makes the minimum investment so high? are the stocks or whatever that valuable at providing a super rate of return or whatever?

why? because all employees could purchase other investments, even if they didn't. in this case they can't. let's change the options. A plan has 10 investments, no limit on 9 of them. they are all money mkt accounts at different banks, all paying the current .001% +/- .0005% or so the other investment is S and P 500, but you have to have 100,000 to invest. would you have a problem with that set up? I hope so. ........... by the way, the reg cite I referred to only dealt with current availability. arguably, even if you passed that, you probably would fail effective availability, which is purely facts and circumstances. how many of the folks can effectively take advantage of the investment you described?

did you mean 1 bottle for sauce, another bottle to get sauced? I did a search, this is about the same as what I use I have never used onion or oil. I use a small can on tomato paste thought their recipe called for 16oz. I use 50/50 Ricotta cheese and cottage cheese I cut back on the ground beef and use 1/2lb or so hot Italian sausage I use no bake noodles. I butter the baking dish beforehand. Lasagna Belmonte Ingredients: 1 med. onion, chopped 3 T. olive oil or salad oil 1 1/2 lbs. lean ground beef 1 clove garlic, minced or mashed 16 oz. tomato sauce 16 oz. tomato paste 1/2 c. dry red wine 1/2 c. water 1 tsp. salt 1 tsp. oregano 1/2 tsp. pepper 1/2 tsp. sugar 12 oz. lasagna noodles 2 c. ricotta cheese 1/2 lb. mozzarella cheese, shredded Parmesan cheese, shredded Directions: Directions: In a large frying pan that has a cover, saute onion in oil until soft; add beef and garlic; cook, stirring until meat is brown and crumbly. Stir in tomato sauce, tomato paste, wine and water. (You may use 1 cup of water instead of 1/2 cup each of wine and water). Add salt, oregano, pepper and sugar; stirring until mixed. Cover pan and simmer slowly about 1 1/2 hours. Meanwhile, cook noodles in boiling salted water as directed on the package, until tender; about 15 minutes. Drain thoroughly, rinse with cold water and drain again. Arrange about 1/3 of the noodles in the bottom of a 9x13 inch shallow casserole dish, crisscrossing noodles. Spread 1/3 of the meat sauce over the noodles; top with 1/3 of the ricotta (you may use small curd cottage cheese) and mozzarella cheese. Repeat this layering two more times. Top with Parmesan cheese. Bake uncovered at 350º for 40-50 minutes. Remove form oven and serve.

Yes, reg cite listed below, but for convenience I copied the list from the ERSA Outline Book (2008 electronic version) the issue being, a "Minimum threshold" for investments is not on this list that can be disregarded Chapter 9, section X Part B Other conditions that are disregarded when testing the current availability of all BRFs. To determine whether a BRF is currently available, the following conditions are disregarded: 1) a specified vesting percentage requirement (e.g., option is made available only to participants who are 100% vested), 2) termination of employment (e.g., distribution available only after employment terminates), 3) death, 4) satisfaction of a specified health condition, 5) disability (e.g., certain form of payment available only upon disability), 6) hardship, 7) family status (e.g., QJSA available only to married participants), 8) default on a loan (e.g., offset against account triggered by loan default), 9) execution of a covenant not to compete (e.g., lump sums in excess of $50,000 available only if a noncompete agreement executed), 10) application for benefits or other ministerial acts (e.g., application required before distribution can be made), 11) execution of a waiver of rights under the Age Discrimination in Employment Act or other federal or state law, or 12) absence from service. Treas. Reg. §1.401(a)(4)-4(b)(2)(ii)(B). These conditions may be disregarded regardless of whether the BRF is an optional form of benefit, a social security supplement, an ancillary benefit, or a right or feature. Compare this to the rule in 2.b. above, where age and service conditions may be disregarded only when testing the availability of optional forms of benefit or social security supplements

agree, especially homemade lasagna. wine is one of the ingredients for the sauce - start to let it simmer, then go out and take a walk because when you come back in the whole house smells wonderful.

I'd agree. he was ineligible to make deferrals in the first place, which is different than failing an ADP test in fact, since he had 'no comp', if he was the only HCE, you wouldn't even have an ADP test under the 'hypothetical'. If you have no comp, don't include on the ADP test rule. And if you have no comp/no deferral, I don't see how there is anything to apply under the top heavy rules. (This is different than those scenarios "I don't want to put in top heavy, just return my deferrals" that some Key employees wish to use)

looked it up. my bad. my memory is really going. I guess it was Prego that used to advertise "It's in there" but that goes back to 1984 (guess I'm much much older than youngsters like you!)

Antonb- my apologies if you were offended by my comments. they certainly were not meant to be offensive about CPAs, but rather, proceed with caution if you know little regarding plan design, safe harbors, etc. there is no easy quick guide I know of. There is just to much stuff that can be missed even with the best of intentions. I've got bigger complaints about asset houses than CPAs who try to do everything - run ADP tests and the like because of their bundled they can do it 'cheaper'. I'm sure I'm not alone in that regard. And I'm sure I'm not alone when saying, despite as many years as I have worked in the field, I've hade to use the IRS Self correction for errors discovered. again, my apologies if I stepped on your toes!

dang it, I hate it when stuff like that happens. (I have the 2008 version on disk, so I was going to copy and paste, and lo and behold, since it wasn't Ragu, it wasn't in there)

I will give you super extra credit for asking. we almost took over a block a plans (or at least to work on them) from a cpa. upon review: what few plans I looked at: no coverage testing ever done no top heavy ever done no ADP test run volume submitter documents were haphazardly checked etc. we ran far away. what a mess.

tripped across this while looking something else ERISA Outline Book, Chapter 11 Section XIV Part B 2012 edition 7(c) Consequences of failing to make a timely contribution... since...safe harbor...must be set forth in the plan....operational failure... primary correction....place participants in same position as if deposit had been made timely...include lost earnings....EPCRS would apply here...safe harbor status would be protected. Late contributions would not require the plan to default back to ADP/ACP testing. This paragraph was not in the 2008 edition, Big Sal must of thought it important enough to add to the book, but then, for all I know maybe he pulled it back out and it is no longer in later editions. ..............

while I wouldn't think it would be missed, make sure 'one participant plan' is checked. I know, I know, "well DUH!", but sometimes the obvious is overlooked. I assume most software works the same. checking that box prevents a number of items from being answered on the 5500 SF, it prevents the form from posted to the general public, etc, by the way, tell them the IRS prefers filing this way https://www.irs.gov/retirement-plans/file-your-one-participant-plans-electronically-using-form-5500-sf-they-are-now-excluded-from-online-search-database One-participant plans cover only a business owner and his or her spouse, or cover only one or more partners or partners and their spouses in a business partnership. Annual returns of one-participant plans can be filed by: electronically using Form 5500-SF with the Department of Labor’s EFAST2 system, if certain conditions are met completing and mailing a paper Form 5500-EZ to IRS. However, electronic filing makes the process easier for the filer and increases data accuracy

I think it depends on all the facts we had a plan pay everyone out late December. assets were 0. then a small gain showed up in January, but that was promptly paid out. we treated as if it was a 'payable' {opposite of a receivable) if it makes sense to include a receivable on an accrual basis for filing I don't see why a payable can't be treated the same. but then the amount was small, etc.

while the Q and A sessions don't necessarily reflect an actual Treasury position the following was suggested at the 2004 ASPPA Conference While not quite the same situation it follows similar logic. They failed to issue notice timely. therefore they failed what is required for safe harbor, so while they still have to make the contribution they should test. the IRS disagreed. 16. Assume a calendar year safe harbor 401(k) plan with a 3% nonelective contribution. The 3% safe harbor contribution is “hard wired” into the plan document. For the year beginning 1/1/2004, no safe harbor notice is given to the plan participants by the required date. Is the result of no notice being given that (a) the plan must perform 401(k) testing for 2004 and (b) the plan sponsor must still contribute 3% for everyone? A: No; You have an operational defect which should be corrected under EPCRS. This will be additionally discussed from the podium.

I don't think so. document requires a 3% safe harbor, and plan is still safe harbor even if contribution is late, as far as I understand the regs.

the plan has an operational failure, and the penalty is possible disqualification. one of the points of EPCRS is to prevent disqualification, so the solution is to fix the problem as if the error hadn't occurred, in this case, to make the missed contribution (adjusted for earnings). there is nothing to suggest or imply "and if it involves a safe harbor contribution, you also lose safe harbor status and have to run an ADP test if you are late" the question, can you correct under SCP? are there practices in place that normally prevent this from happening? ugh, how do you get around "well we know we have to make a contribution, but no one told us how much, even though it is well over a year past the deadline" is the failure insignificant? well, 100% of the participants are affected, etc...probably not insignificant if significant - it appears you could still correct without going to VCP. .02 Correction period. (1) End of correction period. The last day of the correction period for an Operational Failure is the last day of the second plan year following the plan year for which the failure occurred. However, in the case of a failure to satisfy the requirements of § 401(k)(3), 401(m)(2), or, for plan years beginning on or before December 31, 2001, the multiple use test of § 401(m)(9), the correction period does not end until the last day of the second plan year following the plan year that includes the last day of the additional period for correction permitted under § 401(k)(8) or 401(m)(6).

yes, there is no requirement a plan be locked into one safe harbor formula forever, only for a given year.

yes, you have to include all contributions in the avg ben pct test

to clarify, normally you can't aggregate plans with different plan years for nondiscrimination purposes. the only exception being the average benefits percentage test. and in that case: If a group of plans is required to be aggregated for purposes of determining the employee benefits percentage, the testing period is the plan year of each plan that ends within the same calendar year. The plan year is referred to as the relevant plan year or, in the aggregate, as the testing period. [Treas. Reg. § 1.410(b)-5(d)(3)(ii)] for top heavy, : If qualified plans are aggregated in a top-heavy group the value of benefits is determined separately for each plan, and they are aggregated based on determination dates that fall within the same plan year. The actuarial assumptions must be the same for all plans within the aggregation group and must be reasonable with respect to mortality and use a reasonable interest rate. [Treas. Reg. § 1.416-1, T-23, T-26]

clarification please, since sometimes people use terms interchangeably. you said one plan has 'after tax'. or is that meant to be 'Roth'? if it is after tax, and after tax are matched by safe harbor then you probably can't aggregate - I think the formulas would be different at that point, at the minimum I would think HCEs in that plan could receive at a 'higher rate'. certainly, if there is an after tax you have a possible BRF issue.(e.g. if only HCEs were in plan B, then 0% of NHCEs could make after tax!) while both are safe harbor, you didn't indicate if the safe harbor was the 3% SHNEC or was the Basic Match, etc. as for comp, it shouldn't matter if the allocation comp is different. what matters is that for any testing purposes you use a definition that will satisfy 414s.

just to clarify. any old $ accrued would remain under the old vesting schedule - those are protected . it is just the new $ become subject to the new vesting schedule, so you do have to be careful about amending a vesting (e.g. setting up an additional source to track things). the examples 3 and 4 in Treas. Reg. § 1.411(d)-3(a)(4) use the terms "further vesting protections on benefits accrued as of that date." and "for those account balances and earnings."

The ERISA Outline Book (Chapter 4, section III Part F) has: 2.g.What if old schedule is better at all points? Suppose the employer is amending a very liberal vesting schedule into one that would be less favorable at all points to all present participants. In that case, the vesting schedule election does not have to be provided. The present participants (or at least those with at least 3 years of service) would be kept on the old schedule because there would be no reason for them to elect the new schedule. which seems to reiterate the 3 year rule. must be like when food falls on the floor, there is a time period when it is still edible or has to be pitched.

there is, of course the following rule in the regs which wasn't mentioned above. This one was buried deep in the recesses of my thick skull, even blowing the dust off took more work than I care to think about. I am quoting from the FT William basic document though other documents should be similar If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Participant's nonforfeitable percentage or if the Plan is deemed amended by an automatic change to or from a Top-Heavy vesting schedule, each Participant with at least 3 Years of Vesting Service with the Employer may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the Plan without regard to such amendment or change. For Participants who do not have at least 1 Hour of Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "5 Years of Vesting Service" for "3 Years of Vesting Service" where such language appears. The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (1) 60 days after the amendment is adopted; (2) 60 days after the amendment becomes effective; or (3) 60 days after the Participant is issued written notice of the amendment by the Plan Administrator. The election provided for in this Section 13.01 shall be made in writing and shall be irrevocable when made.