RatherBeGolfing

7 minutes ago, ldr said:

Thank you so much!  This is very helpful.

Happy to help :)

4 minutes ago, stephen said:

Creating small balances due to allocating a small forfeiture balance could be an issue - though it doesn't seem to be the case here.

Creating small balances can be a pain, no question about it.  But it really doesn't change the fact that the forfeiture needs to be used, either for fees or as an allocation.  Where it really causes an issue is where you have top heavy plan that relies on the exemption.  Having to allocate thousands in top heavy minimums because of a few hundred in forfeiture allocations can really sting... 

1 hour ago, ldr said:

Hi, I am relatively new to this site and if I am asking the wrong question in the wrong place, I hope someone will say so!  I thought I posted this question yesterday and it seems to have disappeared.

If a client's 2016 corporate tax return is on extension from March 15th of 2017 to September 15th of 2017, normally speaking, the client would have until September 14th of 2017 to make the final 2016 contribution deposits such as match, profit sharing and Safe Harbor.  Now, with Hurricane Irma relief, the client's corporate return does not have to be filed until January 31st, 2018.  Does that mean that the client now has up until January 30, 2018 to make his final 2016 contribution deposits?  Thanks in advance for any advice!

Yes and no.  If the client qualifies for relief, non-safe harbor contributions can be deposited by January 31, 2018.  However, the deadline for safe harbor contributions is still 12 months after the end of the plan year, or December 31, 2017 for a calendar year plan.

This prior thread has some good answers to your question

3 hours ago, TPApril said:

Next year's invoice will still leave a significant balance so just as well not issue it.  I find the plan doc so limited. This is what it says:

You wouldn't have to bill the entire expense in advance.  You would just bill enough to use the leftover forfeiture.  I still favor a contribution equal to the forfeiture amount, as long as it doesn't cause top heavy issues.

1 hour ago, TPApril said:

The Fidelity VS plan doc really provides minimal guidance on the treatment of Forfeitures.

There should be language in the document stating when forfeitures must be used.  It will probably state something along the lines of "no later than the year following forfeiture".

As discussed above, you can allocate just enough use the rest of the forfeiture, but you can't use a $0 allocation to keep from using the forfeiture.  This shouldn't be an issue as long as you are not relying on "safe harbor only" to be exempt from top heavy rules.

Another possibility could be to send the client an invoice for next years work now.  While not official guidance, the IRS did say at a conference Q&A a few years ago that if invoiced and paid in the year when the forfeiture needs to be used, it could be used to pay for next year's expenses. 

14 minutes ago, NJ Mike said:

I would leave it in forfeiture account.  If document says reduce and contribution is $0, you can't reduce it.  Mike

The IRS would disagree.  

42 minutes ago, Belgarath said:

Agreed, but this is a disclosure to the fiduciary, not to participants. I don't know if the DOL utilizes (unofficially) a different standard than they do for participant disclosures, particularly where the fees are not being paid from the plan.

As I re-read this, perhaps not the most lucid of posts. I added in a factor which really isn't germane to the issue, so I'm removing it.

My bad I meant fiduciary not participant, this is 408b2 after all.

Check MoJo's detailed answer in this thread

He explains it much better than I can recite it from the beach on my day off 

47 minutes ago, Belgarath said:

Just playing Devil's Advocate - or perhaps they were attempting to have every combination in one disclosure, so that is would not be possible to give the wrong disclosure. Particularly if it is given by their agents/field force, the possibility/liability of incorrect disclosures for a given product or product combination is probably staggering.

Very possible.  Of course, simply getting all the information into the disclosure might not be enough if it isn't understandable.  I believe MoJo has shared some stories on how in depth the DOL is getting when looking at the disclosures, and looking at whether the participants understand whet the disclosure means rather than just technically correct...  

6 hours ago, mctoe said:

Any thoughts on the merits of the Certified Divorce Financial Analyst (CDFA) designation?  

I can't speak to the merits of the designation, but I have had a few run-ins with people holding the designation and they have been nightmares.  In those instances, the CDFA wouldn't know a QDRO if it bit them in the ass and they failed to comprehend the difference between Plan Administrator, RK, and TPA. 

Edit:  It is entirely possible I just had the misfortune of dealing with the bad apples, but my limited exposure has been pretty bad.

22 minutes ago, frank1971 said:

For End of Year Total Plan Assets (7a column 2) for a calendar year plan, should the value on the participant's 12/31 account statement be used? 

Yes.

23 minutes ago, frank1971 said:

Or should any contributions made throughout the calendar year be subtracted from the 12/31 statement value? 

No.

23 minutes ago, frank1971 said:

The instructions state to not include contributions designated for the plan year but those could be part of the 12/31 value if contributions were made during the calendar year. 

The instructions say to not include contributions designated for 2016 in column (1), which is the beginning of the year assets.  2016 contributions are included in column 2, which is EOY assets.

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Line 7a. top "Total plan assets" include rollovers and transfers received from other plans, unrealized gains and losses such as appreciation/depreciation in assets. It also includes specific assets held by the plan at any time during the plan year (for example, partnership/joint venture interests, employer real property, real estate (other than employer real property), employer securities, loans (participant and non-participant loans), and tangible personal property).

Enter the total amount of plan assets at the beginning of the plan year in column (1). Do not include contributions designated for the 2016 plan year in column (1). Enter the total amount of plan assets at the end of the plan year in column (2).

Line 7b. top Liabilities include but are not limited to benefit claims payable, operating payables, acquisition indebtedness, and other liabilities. Do not include the value of future distributions that will be made to participants.

28 minutes ago, frank1971 said:

If contributions are made after 12/31 but before the tax filing deadline, should those be excluded from 7a-7c and just stated on 8a-8c? 

No.  They are included in 7a-c and 8a-c.

Disaster Tax Relief and Airway Extension Act of 2017 (H.R. 3823)

ASPPA NET article

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 ...the retirement relief provisions are consistent with the recommendations by the American Retirement Association to provide hurricane victims and their families relief from penalties and taxes, mirroring the relief previously provided by Congress to victims of Hurricanes Katrina, Wilma and Rita in 2005.

Yep for 2018 I agree its a one-participant plan

20 minutes ago, austin3515 said:

I thought some people had question whether a plan subject to ERISA can ever turn back and be non-ERISA.  Has that been thoroughly debunked?

The instructions say this, and this plan meets this definition:

A “one-participant plan” is: (1) a pension benefit plan that covers only an individual or an individual and his or her spouse who wholly own a trade or business, whether incorporated or unincorporated; or (2) a pension benefit plan for a partnership that covers only the partners or the partners and the partners’ spouses. Thus, a “oneparticipant plan” can cover more than one participant. On the other hand, merely covering only one participant does not make you eligible to file as a “one-participant plan” unless you are one of the types of plans described above.

It did cover an employee in 2017 though, so how would it meet the definition of a "one-participant plan"?

1 hour ago, ESOP Guy said:

And to now give you more answer then you wanted you can write a DC plan to give the plan administrator all kinds of discretion.

Yep.  Our document uses the "any permissible method" catchall for forfeitures.

You report it on the 2017 Form 5500 because it was due in 2017 even though the first distribution year was 2016.  As of 12/31/2016, you had not yet failed to timely pay the benefit.

I agree with ESOP that your answer isn't in the regs its in the document.  That said, it isn't necessarily 2017 comp, and it isn't necessarily that complicated.  If the document allows for post year end comp to be included, it would be 2016 comp.  Read your document, it should be very simple to figure out whether it is 2017 comp (most likely) or 2016 comp for plan purposes.

I can't see a reason why the relief in Announcement 2017-13 would NOT apply to Georgia.  It wouldn't make sense grant 7508A relief while not granting hardship and loan relief.    2017-13 did refer to Florida counties but also included the following:

Quote

If additional areas are identified by FEMA for individual assistance because of damage related to Hurricane Irma, the relief provided in this announcement will also apply, from the date specified by FEMA as the beginning of the incident period, and that date should be substituted for references to September 4, 2017, in this announcement.

I would also note that 2017-13 refers to areas identified for individual assistance, because that was how the IRS initially limited the relief in Florida.  The subsequent expansion to individual OR public assistance would include all of Georgia just like the 7508A relief.  

I have never used Datair, but I made the switch from Relius to FTW a few years ago.  I did not find FTW system difficult to learn at all, and their support staff is very helpful.  The most time consuming part of the switch was the conversion, but after that I haven't come across an issue I couldn't solve myself or solve with a quick call to support (and they take your calls right away).

Do you have any particular concerns?

GA-2017-02 seems to grant relief to all Georgia counties

Also, the IRS page dedicated to Irma relief provides:

(EDIT:  The way the IRS updates information can be a bit confusing.  In the early days after Irma, only counties that qualified for individual assistance qualified for IRS relief.  This was later expanded to individual OR public assistance, which is a much bigger area.)

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So far, the IRS filing and payment relief applies to the following localities identified by FEMA for Individual Assistance due to Hurricane Irma:

In U.S. Virgin Islands: The islands of St. Croix, St. John, and St. Thomas.

In Puerto Rico: The municipalities of Adjuntas, Aguas Buenas, Barranquitas, Bayamón, Camuy, Canóvanas, Carolina, Cataño, Ciales, Comerío, Culebra, Guaynabo, Hatillo, Jayuya, Juncos, Las Piedras, Loiza, Luquillo, Orocovis, Patillas, Quebradillas, Salinas, San Juan, Utuado, Vega Baja, Vieques, and Yauco.

In Florida: The IRS is now offering expanded relief to any area designated by FEMA, as qualifying for either individual assistance or public assistance in the State of Florida. This represents all 67 counties of Florida.

In Georgia: The IRS is now offering expanded relief to any area designated by FEMA, as qualifying for either individual assistance or public assistance in the State of Georgia. This represents all 159 counties of Georgia.

We are monitoring the situation closely to resolve potential tax administration issues as they are identified. The IRS often updates its information on disaster relief efforts related to Hurricane Irma. For the latest news, check this page frequently.

News Releases

27 minutes ago, Cynchbeast said:

I just got off phone with an IRS agent in the Enrolled Agent department and I want to check the information I received with other ERPAs.

This concerns the requirement that you earn 72 hrs in 3 yr cycle with a minimum of 16 hrs each year (including 2 hrs ethics).  She told me that actually there is no 16 hour requirement as long as you get all the credits you need in the 3 years.

My current cycle is 04/01/16-04/01/19.  So I plan on going to a conference in November that will actually give me over 72 hours credit meaning all I need for 2018-2019 is a few hrs of ethics.  This is okay.

Does anyone disagree with this?  Does anyone have experience to the contrary?

And speaking of Ethics, does anyone know a good source for Ethics hours?

The problem is that the IRS is not consistent in how they enforce the CE requirements.  Circular 230 § 10.6 (e) (2) (i) states that you need 72 hours including 6 hours of ethics per enrollment cycle

230 § 10.6 (e) (2) (ii) states that you need a minimum of 16 hours of continuing education credit, including two hours of ethics or professional conduct, during each enrollment year of an enrollment cycle.

The requirement is clearly there.  Whether they follow the rules is a different question.  Unless you have it in writing that you can ignore  § 10.6 (e) (2) (ii), I would be very careful.  What happens if you get another person reviewing your renewal?  

I know people who have gotten renewals when they had less than 72 hours in a cycle or lacked the ethics credits.  They were told to do an additional credit in their next cycle.  I also know people who have had to fight tooth and nail to get their renewals because their paperwork never made it to the appropriate office even though they had proof of delivery.

Follow Circular 230 and you are always safe.  It isn't worth risking a credential that you can no longer test for.

I wouldn't amend, just move it to the line the auditor wants.

As a side note, I have one auditor from a large CPA firm that does tons of audits, who insists that the correct line item on the Sch H is "Mutual Funds" rather than "PSA" for a platform type plan.  They claim that because then underlying assets in the PSAs are mutual funds, the correct line item is mutual funds rather than PSAs.  The first year they audited, we shifted the assets from PSA to mutual funds.  All my other similar plans with other auditors use the line for PSA.

Both methods are allowed.  See §1.401(a)(9)-5, Q&A-3(b) (2002 regulations)

Note that the 1987 and 2001 regulations required the inclusion of amounts attributable to a plan year but deposited after December 31. 

For more detail see EOB Ch 6, Section IV, Part D, 2.c.

Failure to plan and having less comp at the end of the year is not a mistake of fact.  But agree to disagree.

EPCRS 6.06(2)

(2) Correction of Excess Allocations. In general, an Excess Allocation is corrected in accordance with the Reduction of Account Balance Correction Method set forth in this paragraph. Under this method, the account balance of an employee who received an Excess Allocation is reduced by the Excess Allocation (adjusted for Earnings). If the Excess Allocation would have been allocated to other employees in the year of the failure had the failure not occurred, then that amount (adjusted for Earnings) is reallocated to those employees in accordance with the plan’s allocation formula. If the improperly allocated amount would not have been allocated to other employees absent the failure, that amount (adjusted for Earnings) is placed in a separate account that is not allocated on behalf of any participant or beneficiary (an unallocated account) established for the purpose of holding Excess Allocations, adjusted for Earnings, to be used to reduce employer contributions (other than elective deferrals) in the current year or succeeding year. While such amounts remain in the unallocated account, the employer is not permitted to make contributions to the plan other than elective deferrals. Excess Allocations that are attributable to elective deferrals or after-tax employee contributions (adjusted for Earnings) must be distributed to the participant. For qualification purposes, an Excess Allocation that is corrected pursuant to this paragraph is disregarded for purposes of §§ 402(g) and 415, the actual deferral percentage test of § 401(k)(3), and the actual contribution percentage test of § 401(m)(2). If an Excess Allocation resulting from a violation of § 415 consists of annual additions attributable to both employer contributions and elective deferrals or after-tax employee contributions, then the correction of the Excess Allocation is completed by first distributing the unmatched employee’s after-tax contributions (adjusted for Earnings) and then the unmatched employee’s elective deferrals (adjusted for Earnings). If any excess remains, and is attributable to either elective deferrals or after-tax employee contributions that are matched, the excess is apportioned first to after-tax employee contributions with the associated matching employer contributions and then to elective deferrals with the associated matching employer contributions. Any matching contribution or nonelective employer contribution (adjusted for Earnings) which constitutes an Excess Allocation is then forfeited and placed in an unallocated account established for the purpose of holding Excess Allocations to be used to reduce employer contributions in the current year and succeeding year. Such unallocated account is adjusted for Earnings. While such amounts remain in the unallocated account, the employer is not permitted to make contributions (other than elective deferrals) to the plan.

4 hours ago, Scuba 401 said:

relief not specifically mentioned but the IRS relief for Irma seems to reference all of the relief listed in Rev. Proc. 2007-56.  can anyone confirm i am reading this correctly and that specifically the september 15 deadline to fund DC contributions would be extended to January 31, 2018?

§7508A relief has been granted for those affected by Irma.  The relief declaration reads in part

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The IRS also gives affected taxpayers until Jan. 31, 2018 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 

Treas. Reg. § 301.7508A-1(c)(1)(iii)

(iii) Making contributions to a qualified retirement plan (within the meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2); making distributions under section 408(d)(4); recharacterizing contributions under section 408A(d)(6); or making a rollover under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3);