RatherBeGolfing

What Bill said :)

I agree with the above. I just had this conversation with a fellow industry professional last week. He didn't agree with #2 since the bankruptcy laws don't really track with QP law. Specifically, his concern was that the IRS making it more difficult to obtain det letters will erode QP protection against creditors unless bankruptcy laws are amended to fall in line. I'm not as concerned as he is (yet) but it is an argument to keep in mind.

Yesterdays e-News for Tax Pros included a webinar with 1 free CE Credit for those of us who need it. Working with the IRS Office of Appeals – What to Expect CPE Credits You may earn 1 CE Credit for Federal Tax. To receive a certificate of completion (if applicable to this show), you must: View the presentation for at least 50 minutes from the start of the program for one CE credit. View the presentation while signed in using the same email address that you used to register (you will not receive credit by watching on someone else’s computer). PTIN Holders : In order to get your CE credit reported to the IRS, ensure that your first name, last name and PTIN match your account. Your PTIN begins with the letter P followed by 8 numeric characters. If you don’t have a PTIN or your name and/or PTIN are entered incorrectly, you may receive a certificate; however, your credit will not be reported to the IRS. Other tax professionals will be sent a certificate and may receive credit if the broadcast meets their organizations' or states' CPE requirements. Only registrants who watch the live presentation may qualify for the certificate of completion and CE credit. You will receive your certificate of completion via e-mail about one week after the broadcast.

I agree with your point, but are investors necessarily rational?

I don't do them either but I know some local attorneys who do. From what I understand, it isn't the plan itself that causes the problems its all the circumstances around the plan. Also, I think the IRS still REALLY doesn't like them, because most of them are not done right and are pushed by some seriously flawed promoters... Nothing wrong with them if properly done though.

I agree with all the above. I was just thinking out loud whether the HCEs who deferred the maximum ($18-24k) would still get the benefit of being able to distribute those deferrals as a rollover rather than refunded for a failed ADP test. This is of course assuming that the IRS does not disqualify the plan making refunds/rollovers a moot point.

Well the participants would be made whole, just not on time... But what if the SH is never made (Employer out of business)? ADP test doesn't matter since all assets become subject to taxation at plan disqualification?

We had a plan that used "the last day of the last week that began during the plan year". It was a pain...

(2017 online edition) EOB Ch 11 Section XIV Part B Item 7 (timing of Safe harbor contributions)

If that is what they want to set it up properly on their side, what is the harm? It will take you 5 minutes to prepare the SS-4 and 5 minutes to get the EIN online...

RBD for a non-5% owner who reaches 70 1/2 before retirement is April 1 following the end of the calendar year of retirement (termination). Participant in the example terminated 12/31/16. RBD is 4/1/17

Which electronic delivery rule are you referring to? DOL? IRS?

If corrected by 4/15/2017, the excess is NOT an annual addition. § 1.415(c)-1(b)(2)(ii)(D) Excess deferrals that are distributed in accordance with § 1.402(g)-1(e)(2) or (3) do not give rise to annual additions.

1. A change in the policy does not mean that existing loans are somehow invalid because they don't fit the new policy. The existing loans are contracts between the plan and participant. 2 &3. I agree with ESOP Guy. If the amendment or new policy does not specify how to handle those issues, PA should use discretion and apply the new policy uniformly. On the other hand, it might be better to take care of that in the amendment or write it in to the new policy (not part of the amendment) to eliminate any confusion.

Was it known that he would be an HCE for 2017 when he was allowed to participate in 2016?

If the plan allows for catch-up contributions and the participant elects 7%, and 7% is within the allowable limits for the participant, can you justify not doing 7%? Are the instructions/forms clear on the issue when the participant elects what to defer? If you vendor cannot do what your plan permits, you need a different vendor...

Pizza Pro v. Commissioner – Where Do We Go From Here? Here you go!

DOL Proposed Rule: 60-Day Extension of Applicability Date for Definition of Fiduciary (Conflict of Interest) Rule and Related PTEs

PATH Act (2015). Deadline for filing 1099-MISC reporting non employee compensation moved back to January 31. February 28 is still the deadline for reporting distributions on 1099-R.

Old habits die hard. I know CPA's who do 5500's with a Schedule I just because that is what they have always done. It sounds like you are fine with moving to the SF for 2016. That being said, just because you are eligible for the small plan audit waiver does not mean you are eligible for the 5500-SF. From the 5500-SF instructions (my emphasis underlined)

The way I understand it, you could do an "other" attachment to the 5500 with a statement that an election is made under 4972 that no taxes are owed. This would start the SOL just like filing a "protective" 5330 to start the SOL. The court rejected the argument that NOT filing a 5330 is the same as filing a 5330 showing $0 owed. There was a good ASPPA article on it that I read earlier today, I'll see if I can find it and post the link.

It's the 2016 excess I'm unclear on. If it's taxable in the year of deferral, wouldn't I issue a 2016 1099-R for the deferral and a 2017 1099-R for the earnings? (And another 2017 1099-R for the 2015 excess deferral. "Luckily" no earnings involved.) Lets assume that the participant deferred $20,000 in 2016 (18,000 plus $2,000 excess). The W-2 would show $20,000 in Box 12 since the excess must be reported on the W-2. The excess is not included as wages in Box 1 because it was deferred. The participant has to include the excess as income for 2016 because you can't exclude income in excess of the 402(g) limit. Your basic tax prep software should pick this up assuming the W-2 was prepared correctly. It is now 2017 and you want to make the correction prior to April 15 which means that the excess is taxable in the year of deferral (2016) and the earnings are taxable in the year of distribution (2017). You don't need a 1099-R to report the taxable income to the participant, the W-2 already did that when we reported excess in Box 12. You do need a 1099-R to report the distribution of the excess in 2017, even though it was already taxed in 2016. So you issue the 2017 1099-R with a code P (prior year) to show that while distributed in 2017 it was taxed in 2016. You also issue a second 2017 1099-R for the earnings on the 2016 excess with a code 8 (taxable in 2017). Compare that to the 2015 excess. The same W-2 rules apply, $20,000 in Box 12 which means participant had to include the excess as 2015 income. We have now taxed the excess once. You did not correct by April 15 so the excess is taxable AGAIN in the year of distribution. This is reported with a code 8 on the 2017 1099-R (plus earnings had there been any). The participant had to include the 2015 $2,000 as income in both 2015 (on the W-2) and 2017 (on the 1099-R). The 2016 excess was only included as income in 2016 (W-2). Does that help clear up why you use the 2017 1099 even though it was taxable in 2016?

I agree, those were not the SOLs I was looking for... OP, Indeed, Pizza Pro Equipment Leasing, Inc. v. Commissioner of Internal Revenue seem to be on point here. The SOL that would control is the 5330 SOL, not the 5500 SOL. I agree with ESOP Guy, you owe for all years going back to inception. I am curious though, what was the other site's argument for applying the 3 year SOL? Also of interest would be when that argument was made since the Pizza Pro case is fairly recent.

Was a Form 5500-EZ filed for each year 2015-2007, or did they rely on the under $250k asset filing exemption for any of the years?

Code 8 - Excess deferrals taxable in 2017. The 1040 will depend on how the participant filed and paid taxes in 2015. If the participant did not include the excess as income in 2015, an amended 1040 would be probably be needed. The 2015 W-2 should signal to the IRS to expect a 1099 for the excess since the W-2 shows deferrals in excess of 402(g) limit.