Larry Starr

They've said so. And I've seen it reported in a number of the accounting feeds I get (being an enrolled agent they think of me as an accountant, just not a CPA).

100% agreed.

Yup. But, expect we will get more extensions (particularly the 7/30 due date for calendar year plans).

100% agreed; this is just a bad idea with traps galore just waiting out there.....

Client's advisor sounds like he doesn't know what he's talking about if you have accurately reported what was said by the advisor. The 25% of pay rule does apply (it just might not matter here; but it still applies). There is no "phase out" of the $6,000 catch up amount (which I have to assume is what you are referring to). Also, 415 definitely DOES apply to ALL plans, but that has nothing to do with why he would not need a pension plan (and by that, I assume you actually mean a defined benefit plan). What is your relationship to the client as it appears you are NOT his "advisor"? Answer Mike's question and we might be able to give you some more guidance.

Why do you have multiple DB plans covering the same individuals? Perhaps you can shed some light on why that is necessary for your situation. Though I can't imagine having this situation (we would design the employer's plans to AVOID this very issue), writing the language for multiple plans should be a trivial issue. You would need to establish a hierarchy for all the plans and incorporate the same language in each plan, identifying the plans by name and number.

I'll save (what I think is) the obvious question for your second post; here, the answer is "apply the document language". It clearly says Plan A is the plan to be LIMITED. Plan B is NOT Limited. I do have one problem with your math: X + Y CAN'T be greater than Z since X is (by definition) limited. If you meant to say "if not limited, X + Y is greater than Z", then you have a correct statement. Since X is plan A's benefit, X is limited to the maximum (Z) minus the plan B accrual (Y). Noting that we have not seen the actual language of the plans, I would say you have made the correct interpretation and since that is CORRECT, by definition nothing else would be a correct interpretation.

No problem; we are all trying to deal with a significantly difficult situation. Take care.

In the official Interim Final Rules they told us how to calculate EXACTLY the amount to request, and for a sole prop they took the employer contribution off of the Schedule C (the whole amount). Do you need me to find that for you? I'm sure I can. And yes, it APPEARS that it is just that simple; we are advising clients to WAIT until they are six weeks into their 8 weeks with the hope that we will have more official guidance. And there is talk right now of making changes in the PPP, like making it 16 weeks, or making it some period of time AFTER the business is allowed to open up, or changing the percentage to 50/50 instead of 75/25, and a whole bunch of other ideas. No one knows for sure where it is going, but we are not seeing anything that would NOT count a BIG DB contribution toward the 75% rule ( in fact, all by itself, it very well could be 100% in the right circumstances).

The PPP money can be physically used for anything you want. If you are really asking if matching contributions to your plan will qualify for the compensation component (the current 75% minimum requirement) for forgiveness, the best answer at this point is yes! We are awaiting official rules, but they clearly allowed 100% of the 2019 employer contribution to be used for the calculation of the PPP amount. Also, it appears that ANYTHING contributed in the 8 week period to the plan (employer contribution) will count for the reimbursement, not just what is applicable to the 8 week period or a pro rata amount of the annual amount. So, it appears that if you fund the whole year's expected contribution in the 8 week period, it will all count.

I agree you did what I would have thought made sense; waive the fees not just for CRDs but ALL hardships. Was not including regular distributions in that thought. Would not consider waiving fees was appropriate for CRLs.

Did anyone try simply Googling "TPT License"? Amazing what comes up with just a little creativity! https://azdor.gov/transaction-privilege-tax/do-i-need-tpt-license https://azdor.gov/transaction-privilege-tax/tpt-license/applying-tpt-license Do you think your plan meets any of the descriptions on this list? I'm going to guess what you got is equivalent to a mass mailing where the AZ revenue people are just doing their due diligence to make sure all taxpayers know what they are supposed to do in Arizona. Best as I can tell, retirement plans don't pay taxes! Businesses that perform the following activities are subject to TPT and must be licensed. retail sales restaurants/bars hotel/motel (transient lodging) commercial lease amusements personal property rentals contracting severance (metal mining) transporting nonmetal mining job printing publishing utilities telecommunications private (rail) car

OK; now we have more info. Please clarify: when you say your check is reduced, I take it the GROSS amount is smaller? If that is the case, then my explanation of "compensation package" applies (just it wasn't explained to you in advance, just sprung on you). OK: more than likely, if you are not getting your contracted amount under your employment agreement, you have a case against your employer. HOWEVER, if he knew in advance you would cost him money for the plan, would he have said that comes out of your percentage of receipts? Perhaps (probably?). And what would you have done? Agreed to it, because you were getting those funds directly into your fully vested retirement account? Perhaps (probably?). What is your recourse? I assume you are actually an at will employee, so you can probably sue your employer and be looking for another job at the same time because it is not likely you'll be continued in the current one. You've got to pick your battles. Since your GROSS is reduced before taxes, I don't think it matters one bit that it is called a "loan repayment"; that is just a handy way to describe it (but I like the "total compensation" concept better as it's easier to explain to highly paid employees) since it certainly is NOT a loan or a loan repayment. Best of luck.

Do we get to know who you are? Very nice message!!!!

Yes, but in your case it does! In his, it is obvious to all of us, it does not!

I've heard that old chestnut from a number of people over the years and it doesn't persuade me. We did have one client where that was a real issue (a head-hunting firm with high end clients where it takes very little money to open a competing operation). So, they didn't allow payouts AT ALL until NRA. That was a tough one, but they also had very little turnover and have now been clients for over 30 years and with a number of changes in the ownership and older "partners" retired and younger ones bought the business from them. They eliminated the NRA distribution requirement about 15 years ago and it doesn't appear to be a real world problem; the very original owner was the one who was paranoid about the issue.

Never! Everyone of our plans (I don't know of any exceptions) has a last day provision so all the necessary allocations can be made before he is paid out. We have no idea what is going to be allocated to the terminee at year end (say, non-elective safe harbor, for example) so we don't want to have to make two distributions (and the client incur twice as much in fees). Also, we don't want the client to have to deal with making distributions multiple times during the year. If someone quits every month of the year (I would stop hiring that guy back... JOKE!), then the client is going to have to deal with making distributions 12 times in that year. Better that we make the distribution AFTER the year is over in which the person has terminated and the year end work for that year has been completed. Then, it's just one distribution and the distribution forms package goes out to all 12 at the same time and, hopefully, we can get most of the paperwork back and make most of the distributions at the same time. This also prevents employees from "quitting" to get their retirement money and then get rehired (legitimately, because the employer really did want to keep this guy because he's a great worker). Having the up to year delay avoids that issue completely.

Good job Luke. I am very aware of that definition; my friend (now deceased) was a senior official at Merriam Webster (they are a Springfield, MA company) and was the editor in chief of the MW Collegiate Dictionary. He and I once presented a paper to our regular group regarding misuse of certain phrases, and we covered "begging the question". The fix is so easy: just say "raises the question" instead and everyone will be happy and the individual will no longer raise the ire of those of us who react to "beg the question" when used incorrectly like fingernails on the chalkboard!!!!

Everyone: I gave him a scenario where what it appears might be happening would be perfectly ok. Of course, for a lawyer. he wrote a lousy question without the details necessary to really answer his question. HOW is the $500/week being recovered (did they REDUCE his salary or have a payroll deduction)? Of course, if the latter, all the problems we all know about would apply. One would have thought he might have responded to my very detailed posting saying: "No, that's not what happened" and give us the details. Maybe because what I proposed is EXACTLY what happened, we haven't heard back from him. One of the reasons I hate "participants" (even bad lawyer participants) posting on this board and why I usually refrain from responding. Sometimes I just can't help myself........... Larry.

Yeah, he said he was an employee, and put "of counsel" in quotes, so I went with him being an employee and talked about W-2s. I assume if he wasn't getting W-2s but a 1099, he would respond accordingly and then we can string him up for that mess!

Agreed!?

I have no doubt it's ok. Prior to the plan being adopted (after year end) with a last day provision, there was no entitlement to a contribution by anyone (there was NO plan!). So there is no take-away of anything that would have been accrued (the right to an allocation) that would be true for an ongoing plan that existed in the prior year if a last day provision was added after participants have accrued their 1000 hours in that year. FWIW.

It doesn't "protect" the PA. If there is an amendment, then there is no mandatory withholding for short period. If the employer doesn't do the amendment, there is a mandatory 20% withholding; there is nothing that the PA has to "decide"; it is black and white. And, the withholding can be avoided by having the employee do a direct trustee to trustee transfer to an IRA (like, a money market IRA set up at their local bank) and then the participant can take the money with no withholding. HOWEVER, the participant must always be reminded that he is going to have to pay taxes on those withdrawn funds (just no penalty) and if he doesn't have the withholding but withdraws the money, he might have an underwithheld situation when he does his taxes and have penalties applicable to that status.

It is perfectly permissible for an employer to say that your compensation package includes your benefits. Let's say your "total package" is $200,000. So, if your health insurance is $20,000 a year paid by the employer, the employer is going to set your W-2 compensation at a number that is reduced by that expense. Likewise, other items might be included in the gross calculation but not in your "paycheck", like company car, continuing legal education, country club dues, etc etc etc. We have lots of legal and medical practices where the total compensation package approach is used (I teach my clients to use it!) for their more high paid individuals. And if one of those docs or lawyers is getting a company contribution into their 401(k) of $35,000 to maximize their 415 limit, that is $35,000 that is NOT paid to them in their W-2. If they are not in the plan, then that $35k is in their paycheck. Your 3% might be being treated in exactly that way, and there's nothing wrong with that so long as you don't have an employment contract that says otherwise (our clients' have employment contracts that explains that their total compensation package provided to them INCLUDES these specific items). It appears they are doing a salary REDUCTION (not a salary deduction) and that's the way it would be handled. If that is what they are doing, it is NOT a violation of any of the safe harbor provisions. You are getting 3% of your (let's say) W-2 compensation allocated to the plan. It's just that your W-2 is lower than it otherwise would be, and yes, you are effectively funding your own 3% contribution. We did the same thing many years ago (and still do with the 3% safe harbor) with regard to rank in file employees. When the plan is established and we have to give employees 3%, we may tell employees that BECAUSE we are installing a plan where they will get 3% contributed, THIS YEAR we are forgoing our regular 3% raises to pay for the plan contribution, but only this year. Next year we will be back to regular raises. If you are clever enough to see the math here, you will recognize that the one year lack of salary increases actually pays for the 3% annual contribution FOREVER, not just the first year. As I wrote and said when top heavy came in: "Congress says you have to give the employees 3%; it doesn't say YOU have to pay for it!"

People always look for things to worry them; advisors get paid for explaining to their clients things that maybe they should worry about. I am not worried; these words are important: Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Let's say I have plenty of cash on hand in April to cover my payroll costs for the 8 weeks, mostly because my income is clustered in Jan - March, and Nov-Dec. There is LOTS of current economic uncertainty, and my cash flow may dry up (just like a closed restaurant) if my clients can't pay their bills due to the same economic uncertainty. So, I believe the current economic uncertainty makes it quite likely that my ongoing operations could be drastically affected by the shutdown. It doesn't say the "ongoing operations during the 8 weeks", just the "ongoing operations". They have said they are going to look at all the PPP loans over $2mill. If you are in that category, you should have legitimate worries about your ongoing operations, but the "economic uncertainty" phrase will make it very hard to challenge an employer's certification since, it is "uncertain" and that is all that should be required.