CuseFan

You can, as part of an employment agreement which defines the total compensation package, provide that a person's base pay is permanently reduced by X amount which will be contributed as an employer contribution on the employee's behalf. Like plans that require employees to contribute as a condition of employment - the amounts do not count as deferrals. However, providing annual discretion - which if you do with matching contributions that indirectly provides discretion - then I think you have a CODA instead. Unless with a match the maximum is assumed and "charged" whether he gets it or not. Much easier to defend at the start of employment (or plan) - the total compensation package is X and it is comprised of base pay A, retirement plan contributions B and H&W benefits C plus whatever incentive pay is earned. If there's a waiting period then define up front these components before and after, because doing it only when the person becomes eligible looks more CODA again. Of course, if someone takes a lower comp because of these "employer provided" contributions that are subject to a vesting schedule - that's another complication. In summary: defining the total compensation package by component in employment agreement at employment commencement - good - reducing a participant's pay arbitrarily to pay for his matching contributions - bad.

Hopefully he had no employees. I guess if he files bankruptcy the plan assets go to zero - and I would terminate and file a final return.

Nicely crafted. Although you can pay life and disability insurance with pre-tax dollars, I don't believe you would want to because that would make any benefits paid under those policies taxable (unless under the $50k coverage exclusion for ER provided GTL). There are administrative costs with a cafeteria plan, so the message to the employer can't be pure payroll tax savings. Having a cafeteria plan may be an advantage - or disadvantage not having one - when trying to attract and retain employees, especially for a small business and even more so if the small business does not offer a retirement/401(k) plan. If you can point to local competing employers who may have these plans, that could help as well. You should also research and present the tax savings that could be available to the owners on their own benefits under the arrangement, rather than reference "special rules" - if you can demonstrate that they can save both at the business and personal level you have a stronger case. Good luck

Thanks M - I was not aware of this special rule, it makes sense (score one for the government!), and is helpful to know.

Excellent point. Here's to continued Congressional gridlock that prohibits tax reform/simplification and keeps us all in business!

That is my understanding as well, but doesn't answer the question in-service withdrawal questions. I would defer to the original (MP) document and if it didn't allow for those dollars I would not allow under the new merged plan.

When was the amendment prepared and adopted? If it was after 11/30/2015 then it was not permissible because no matter how you slice it there is a PY that began 11/29/2015, so the only way to change to a fixed 11/30 PYE was to amend on or before 11/30/2015 and to have a two day short plan year. I'm not aware of any exception here that would allow you a 367 day plan year - same with 5500. My burning question is whether this was a conscious decision by the plan sponsor (doubtful) or an oversight by the TPA? That sort of specific language is tough to miss. Was is it just TPA laziness? Remember, people, certain plan provisions are there for the benefit and convenience of the plan sponsor and its participants, the convenience of the TPA is secondary.

By "after-tax value" do you mean from voluntary after-tax contributions, Roth contributions, or net unrealized appreciation? Is the employer stock fund designated as ESOP?

RE Agents, if working solely on commission under the supervision of an agency and not paid with respect to hours worked, are definitely considered self employed and may establish retirement plans with respect to that income.

If it's an "in-service" distribution and RMD then I assume it's an owner, which would mean the high income phase out for charitable contribution deductions does come into play. As retirement plans must pay RMDs before rollover distributions, there is no way to circumvent.

Not sure about the implications for a governmental plan, but I'm of the opinion that you should always track different money types separately at all times, regardless - and whether or not there are different restrictions on the different types. My thought, w/o research, is that there is no reason or basis upon which you can now allow in-service w/d on the MP dollars, the merger shouldn't change anything in that regard.

If the plan terminates then it looks like a blatant attempt to circumvent the nondiscrimination rules. if he amends the plan to increase his benefit/account balance up to 415 limit (or asset balance) in 2018, assuming no other eligible employees, then maybe that works since any new hires at the new practice/location would not be eligible until 2019.

This illustrates the difference between a vendor and a service provider. The former simply provides a product according to its delivery system while the latter delivers service that provides value to the customer. Much easier to fire a vendor than a service provider.

Ownership, if I'm not mistaken, is also determined by options as well, so if you have 3 equal (1/3) partners, each of which has the option (via partnership agreement) to buy 50% of an exiting partner's share then you actually have three majority owners. I've seen this done.

I'm not up on all the SH intricacies, but if you are a "maybe SH" then you're saying that none of the mid-year amendment prohibitions apply unless and until you actually do your SH amendment? Because if the union exclusion is not already in the plan then an amendment to add it would be an amendment that would reduce/limit SH coverage and otherwise be precluded if those restrictions did still apply.

From IRS website - this should tell you all you need to know. Governmental Plans Can Elect Second Cycle E Revenue Procedure 2012-50 allows sponsors of individually designed governmental plans to elect Cycle E (instead of Cycle C) as their second remedial amendment cycle. Cycle E election Sponsors can elect Cycle E as their second remedial amendment cycle by filing a determination letter application for their plan between February 1, 2015 and January 31, 2016, instead of the second Cycle C submission period (February 1, 2013 - January 31, 2014). Sponsors don’t need to notify the IRS of their intent to make this election. Sponsors who elect Cycle E must: amend their plans for all applicable items on the second Cycle E Cumulative List, and timely adopt any interim amendments required for governmental plans during the second Cycles C and D. Sponsors electing Cycle E as their second remedial amendment cycle will have their plans': subsequent remedial amendment cycles revert to Cycle C (for example, the plan’s third remedial amendment cycle will be the third Cycle C), and second cycle determination letter expire at the end of the third Cycle C submission period (January 31, 2019). Prior determination letter Determination letters for individually designed governmental plans issued after the initial remedial amendment cycle expire on January 31, 2014 (at the end of the second Cycle C), even if the sponsor elected the first Cycle E as the plan’s initial cycle. However, the IRS will extend the expiration dates on these letters to January 31, 2016 (the end of second Cycle E), if the sponsor elects Cycle E as the plan’s second remedial amendment cycle.

Paying retro to age 62 would be an RASD and unless the plan allows would be an operational defect. I agree there are some compliance issues here and would explore settlement outside the plan, but would also suggest counsel.

Luke is correct. if a required distribution from a DB plan - whether a cash out or RMD - is not paid when it was required by plan terms to be paid, then it must be corrected by making the payment plus interest. Some plans true involuntary cash out threshold is actually at $1,000 because they don't want to deal with default/auto rollover - so check for that language. However, if you have PVABs under $1,000, this doesn't help. Plans administratively have "wiggle room" as was noted, but maybe to the end of the PY or first quarter of subsequent year, but certainly not 5 years.

Agreed - it is tax year that is relevant, not the year of deposit.

If she has the money to pay it off she can just roll her balance (after loan offset) directly to IRA and then send check for loan balance to the IRA with documentation that it's for the loan offset. I did exactly that myself 14 years ago without a problem. This can be quicker than waiting for a payoff amount, sending in payoff, waiting for it to post and then requesting total payout, but it is more complicated - for the participant and IRA custodian - not the plan or the RK.

It is aggressive, but I have seen designs that exclude people on the basis of compensation - whether an exclusion of those earning above or below a certain amount.

I think you got it nailed. I assume this is a 403(b) if the participant was able to pay directly to the "vendor". The vendor should also be scolded for accepting an impermissible contribution outside of the payroll process.

If you have some sort of plan document that wraps it all together, which is what I assume you mean by "megawrap", then yes, you can file as one H&W plan on one 5500 with whatever number of Sched A's you need.

yes, absolutely, if cross-testing any part of the plan then everyone must get gateway.

Sorry, my comment was more tongue in cheek slam against the attorneys reaping millions by getting plan participants, individually, tens and hundreds rather than government waste. Clearly that sort of discussion can last us the rest of the year. Or maybe it's all a government conspiracy to fund extraterrestrial research. As they said in Independence Day: You didn't think they actually spent ten thousand dollars for a hammer and thirty thousand for a toilet seat, did you?