CuseFan

Sorry, I know managing a huge union fund and population is no walk in the park, and I did not read the article, but as an old timer the connection between teamsters and dead people collecting pensions struck me as humorous. So, to keep it going, I wonder how many of them voted on Tuesday?! I know the real gist of the article was the failings of a government agency, but making fun of that is like shooting fish in barrel.

Wait, teamsters and possible pension fraud? Never would have crossed my mind in a million years, where is Jimmy Hoffa when you need him? If I end up next to him in the next few days you all know who did it - you won't find me, though, but if you a paint imperfection in the NY Giants or Jets logo in the Meadowlands end zone, that's probably where I'll be - LOL!

We've seen clients exceed that limit and run a carryforward balance deductions, or others pay the excess as W2 and currently deduct rather than contribute. This is where you put your consulting hat on as there are other (welfare) benefits where D-B prevailing wage fringe amounts can be directed. We've also done CB to cover a floor of like the first 5% of pay of D-B PW. One of the complicating issues there is if someone's PW is less than the 5% credit they still get the 5%.

If they are Directors and getting paid fees for that but aren't employees, they should be getting 1099 income and could do their own plans off of that.

I think this is a big deal and the first question to be answered. Regardless of how they income reported to them or why it's W2, the fact appears to be that they are not providing ANY services to the employer and so even if you can argue it's plan compensation the IRS would say it doesn't matter because they have 415 compensation of zero. If they can substantiate services of some sort that's a different story and maybe it's untracked hours (or salaried hours or some equivalence) instead of zero hours. Otherwise, they're just on the payroll getting a paycheck for nothing, which if I'm the IRS I'm also questioning whether that is a legitimate deductible business expense. Sorry, seem to be in pessimistic, devil's advocate, argumentative mood this afternoon.

Yeah, I was a little curious on the timing of the question given the 5500 filing deadline had passed (unless not a calendar year plan or disaster area extension) and someone already answered it and filed accordingly - thinking maybe you/they were looking for reassurance on what was already done. If 2022 5500 does not show zero ending assets (and participants) then there is a 2023 final filing due and without extension would have been due 8/31, before an extended 2022 return, talk about a conundrum!

The loan limit applies within a controlled group of employer's retirement plans, so I think he is OK. I know there is some aggregation if the person is the business owner on the 401(k) side because he is also considered the "owner" of his 403(b) but not sure if that is only a 415 issue. If he is an owner I'd dig deeper, otherwise I think he's good to borrow.

Agreed, especially if interns are students - a two-year internship is not "forever" even though maybe longer than the norm, the client's initial phrasing was misleading. Sounds like it's all squared away now.

If the legal documentation said they were merged 12/31, then for that brief time in 2023 you had two trusts but one merged plan, I think you're good.

John, that was my first thought - are they truly interns or is that classification being used to exclude part-time employees who may ultimately work 1000 hours? I guess someone might intern at the same company for their entire college career, or maybe the employer's industry is one where long term internships are normal (but isn't that more apprenticeship?) - and do these "interns" usually get hired into benefit-eligible positions or are they longer term term temporary labor? Probably not the TPA's concern here but certainly a situation I'd call a head-scratcher.

Probably OK but if the terminating plan has excess assets that are being allocated remember to include those in the benefits when coordinating 415 limits with new plan. Also, if you were and/or will be aggregating with a DCP to satisfy coverage and nondiscrimination, they need to have the same plan years so it might be cleaner to terminate 12/31 and start new plan 1/1. I assume this is likely an owner-centric plan and the owner(s) want to roll lump sums and self invest, settle the liabilities and risk thereon, otherwise simply freezing traditional formula and converting to CB would save a lot of time and expense.

As J noted - not only CAN they do this, they MUST do this.

Like most open ended questions the answer is it all depends. What is the objective - rewarding/sharing in profits, retention/competitive comp & benefits package? What is the industry, how much does the person make, what can the employer afford to provide? If the employer provides other substantial benefits on the health and welfare side, maybe a SEP or SIMPLE IRA or 401(k) plan with a match is appropriate. If the employee is invaluable, say hired to run someone's business for them, then maybe a 401(k) with a substantial profit sharing is appropriate, or even a defined benefit plan if $60k-$70k in annual retirement isn't enough, although if the owner is also an "employee" then this may or may not be possible depending on circumstances. Answers to those two questions at a minimum are necessary and you ask for "best options" - for the employer or employee or blending the needs for each?

Forgetting about the short plan year and termination for the moment, what if the PYE and valuation date was 12/1 instead of 12/31. Would your MRC due date still be 9/15 or 8/15 (8/16)? I think it's the August date. So in your situation I think it's due 7/7ish. Also, why risk a late contribution for 8 days over an interpretation question/gray area?

Yes. I believe a submitter who is not the plan sponsor must be authorized to practice before IRS (but do not know this for certain). If not, they could prepare the submission for the plan sponsor to file. Good questions, never thought about it. My thoughts are about this in general, not your specific inquiries. If the practitioner was at fault and is proposing an aggressive remedy that is not a standard correction and which would limit the correction cost for which it is presumably responsible then I'd say that is a conflict and must be disclosed to the client. If the at fault practitioner is doing the correction work w/o fees to avoid incurring another professional's costs, maybe that could be a conflict. However, any instance where the correction is routine and mandated, whether completed by an at fault practitioner or not, I don't see where there would be any conflict. My general thought, if a practitioner made a mistake they need to make it right. These are my personal opinions. I have no answers or opinions on your other specific questions.

Yes, I don't see why not if BRF satisfied.

Maybe the IRS's AI is too much A and not enough I.

Thanks Bill, I never knew that - I learned something new today so you can teach an old dog new tricks! Of course no guarantees I'll remember that months from now when it happens again.

Sorry, without the need to aggregate.

Provided each plan can satisfy coverage without the need to aggregate then you can test separately for nondiscrimination.

that is my understanding

I bet you all can't wait until the government shutdown!

I don't think so, but if the reason for doing so is to keep those assets invested, note that gains and losses in that escrow account will increase/decrease the portion that gets allocated each year - so volatility and lack of liquidity could be issues.

It is a taxable fringe benefit and included in the 3401(a) compensation definition regardless of the employer's discretionary decision on whether to withhold unless the plan definition also has the permitted fringe benefit exclusions. The 401k Answer Book has a nice table that shows the various 414s safe harbor compensation definitions, inclusions, exclusions and optional exclusions. Other publications likely have similar,

SoBs are a pain to administer, which is likely the reason the insurance company wants it out, to make its life easier. Employer shouldn't care anymore, as noted, and there is no prohibition on removing - it's one of those easier to take out than to put it provisions.