Larry Starr

We use Millenium Trust also, but first we have a search firm that charges a whopping $10 for a search. We've used them for years and they have always found our missing individuals. Just did one last week; took them less than an hour to find current address in Brooklyn for our lost beneficiary (in this case). Did you do all the searches you are supposed to do; you don't mention that.

Barbara, this is an answer without doing any research, but I can't see how their determination makes any sense. In regular rate group testing, if you need one additional person in the two highest rate groups to pass and you increase one participant who jumps two rate groups so he qualified in both, that's how you pass. Ask the provider to provide backup for their opinion. I don't there is any, but if I'm wrong (again, I did not do the research), I'd love to see their explanation.

I don't think there is any choice; you are adding a new employer and deciding which QSLOB it belongs to. That's a change in your prior information provided (line 11 stuff). It won't impact the NUMBER of QSLOBs, but it does impact your determination of who is in each QSLOB, and that's a new determination.

Not sure I understand your question. You say plan says use full year; why is there a question?

ESOP gave gave you a great answer; the other responses have also pretty much hit the target EXCEPT for the comment about now that you have started dealing with a DRO with Hancock you somehow are stuck. No you are not, and you need to tell Hancock there is no QDRO. The spouse's problem is with HER LAWYER; she (and her lawyer) needed to perfect her right to 1/2 of his retirement money. There is a very specific legal process for that (it's called a QDRO) and they did not do that. Barring that, there is NO QDRO; he is not married; he can get all his money and then she will have to sue him for her share. The lawyer who wrote this: "Respondent will direct the Plan Administrator to divide the funds equally between the Respondent and the Petitioner, that being 50% to each party, however distributed" clearly did not know what he was doing and probably is guilty at a minimum of malfeasance and more likely malpractice. But that's NOT the plan's issue. A marital settlement document cannot authorize the participant to tell the PA to do something that is not legally permitted.

A retirement plan (to state the obvious) holds its assets in a trust. That means, there must be trustee(s). It is interesting that it is state trust law that mostly applies to the issue of what is a valid trust (that's why we have a designation in our plans as to what state the plan will come under, even though it's clearly subject to ERISA which is federal law and state law is superseded in all other areas. Clearly, the trust assets are still going to be held in a trust that is subject to the jurisdiction of US courts (that's a given and a requirement). Can you have only foreign individuals as trustees? Don't have an answer to that. In the estate planning area, naming a non-US citizen as a trustee may result in the trust being considered a foreign trust, which would clearly be a problem for an ERISA plan. I think this is one that needs to be kicked up to the proverbial "good ERISA attorney" to opine on. Or, you can just make sure you have new US citizen trustee appointed and avoid all this mishegas (and yes, that came up in my spell checker!).

The parent is a foreign employer. Were the employees of the US subsidiary non-resident aliens when they were with the parent? I expect they were, and if so, I don't believe their time with the foreign employer has to be counted. Here is some stuff from the Erisa Outline Book: 4. Exclusion of certain nonresident alien employees (nonresident alien exclusion). An employee who is not a U.S. citizen, and who is a nonresident alien for federal tax purposes and who receives no U.S. source income (as defined in IRC §§861(a)(3) and 911(d)(2)) from the employer is an excludable employee. See IRC §410(b)(3)(C) and Treas. Reg. §1.410(b)-6(c). Generally, income for personal services is not U.S. source income unless it is for services performed in the United States. Merely because a nonresident alien receives compensation from a U.S. company does not mean the individual has U.S. source income if the compensation is for services performed outside of the U.S. For more information on how to determine whether an alien is a resident alien or a nonresident alien for tax purposes, and whether a nonresident alien receives U.S. source income, see IRS Publication No. 519, U.S. Tax Guide for Aliens. Also see IRS Publication 570, Tax Guide for Individuals With Income From U.S. Possessions. I understand that to mean (assuming exclusion of non-resident aliens in the plan) that their non-US source income (and hours) don't count. Here, you do not have US employees working for different US subsidiaries of the foreign owner, you have them working outside the US and now (for the first time) having US source income and hours and that is a different situation. Does anyone disagree? Larry.

Yes. 1) Nothing prevents you from making the plan effective 1/1/19 even though they were not yet in business. What you have to make sure of is that whatever you do for eligibility brings in the people you want. No short plan year needed. Also, you can use as predecessor service the time they were with the prior firm, so 1 year/age 21/semi annual entry date (with 7/1 entry) would work and part timers (under 1000 hours) aren't eligible. 2) The plan will likely be top heavy so go with the 3% non-elective since you'll have to give 3% TH minimum anyway. Larry.

Let's forget the specific question and discuss the objective. First, is the "executive" the client (business owner) who can actually have this change made to the plan document? Let's assume that "executive" equals "business owner", because if it isn't, the employer should just tell the executive "no, the plan does not allow for that". Sure sounds like the "advisor" is looking for commissions! Why does rolling his funds into IRA seem like a good idea? What are we attempting to accomplish by such an action? Is the plan participant directed or trustee directed? Does he want to invest in things that are not allowed in the current plan document? Probably more questions. I have long argued that you DON'T answer client's questions; you ask them "why do you want to do that" and you will find out that the question is the WRONG question. Here, you are trying to answer the question, but the real issue is not clear, so this might not be the right question.

Let's rewind. The contribution was made by the extended tax deadline, and therefore it is deductible and the compensation is reduced and I feel comfortable using the smaller number of $30k as the amount subject to the missed minimum funding deadline. The 5500 should show the unpaid minimum of only $30k so it should be re-filed. The instructions to the SB say to include the payments made by the 8 1/2 months (even though the deduction limit goes to 9 1/2 months). Show the $60k contribution on the 2018 SB. Sorry for all the wrong answers the first time! Did you already file the 5330 for the penalty? I assume you did. That likely needs amending also.

And it was me! Yeah, I misread the deduction issue.

Maybe. I'll relook at it. I didn't bother to check the deadlines, I just read "late" and didn't realize it only applied to the 412 issue.

One of us misunderstood the original posting I think. Don't they show the contribution being made AFTER the extended tax deduction deadline? I agree with your first sentence; isn't your second sentence a misstatement of the situation? What am I missing?

1) No. 2) NA. 3)Yes, but remember that non-resident aliens are excludable. Foreign ownership can be a big problem; sometimes there are multiple US companies owned by the foreign parent but the US companies don't know they are related because the parent keeps it secret. We have had the problem. One big mess because the US companies are in a controlled group and none of the US advisors know it. We found out when the parent decided that it wanted to merge the two US firms; boy were the presidents of those firms surprised!

In addition, the employees have an enforceable legal right to the additional funds.

Yes, you can have the integrated formula for the over 1000 hours people. You will have the appropriate eligibility provision to bring in the under 1000 hour people and, as you noted, they are tested separately. Now, let's assume the plan document will provide the under 1000 hours folk a zero benefit. No problem. After the year is over, ask him how much he wants to give each of those under 1000 hour folk and do a -11g amendment to make that happen. By definition, that amendment will be non-discriminatory. Of course, you have not given us all the needed data to really answer the question because we don't know how much the compensations are of the under 1000 hour folk and how much he wants to give them. As noted in a prior answer, if the amount he wants to give them is less than the IRA max, just give them a bonus to fund their IRA and we don't have to go through all the complications I introduced in my first paragraph of this response. Larry.

1) The $60k was not deducted for 2017 (it couldn't be because it was not timely contributed for a 2017 deduction), so it can't reduce his net SE income for 2017. That means the required contribution (from your info above) will be $50,000 and the late payment penalty will be on $50k. 2) Yes, the unpaid minimum is $50k, and that is how you filed, so no changes will be made to the filings. 3) The $60k will be shown where it has to be shown, on the 2018 return. Got more questions: bring 'em on! Larry.

As was alluded to, I am a big broadway fan. Actually, I am an investor in a number of shows. In the last two years, two of my shows have won Tony's for Best Musical Revival (Once On This Island, 2 years ago) and this year, best musical (Hadestown). And we've got FIVE new ones in "pre-production", including the one I am most excited about (maybe we'll make money on this one!) which is we have the rights to Neil Diamond. I'm hoping it will be our Jersey Boys. Now, the LDS (the Mormon Church is the Church of Latter Day Saints), was very smart. Back when Book of Mormon was early in its run, the LDS took out full page ad in the Playbill: "Now that you've seen the show, read the book". Very smart of them I think. For those who don't know, the show is NOT really a knock of Mormonism, it's a knock on ALL religions, but what else would you expect from the guys who do South Park and Avenue Q (another clever musical). Here's a useful line from the Wikipedia entry for the musical: The Book of Mormon is a musical comedy. First staged in 2011, the play is a satirical examination of Mormon beliefs and practices that ultimately endorses the positive power of love and service.[1] The script, lyrics, and music were written by Trey Parker, Robert Lopez, and Matt Stone. Parker and Stone were best known for creating the animated comedy South Park; Lopez had co-written the music for the musical Avenue Q.

Sorry, but you are very limited. But make sure to read my note at the end of this quoted info Read this: https://www.irs.gov/tax-professionals/understanding-tax-return-preparer-credentials-and-qualifications LIMITED REPRESENTATION RIGHTS: Some preparers without one of the above credentials (CPA, EA, ATTY) have limited practice rights. They may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question. Tax return preparers with limited representation rights include: Annual Filing Season Program Participants – This voluntary program recognizes the efforts of return preparers who are generally not attorneys, certified public accountants, or enrolled agents. It was designed to encourage education and filing season readiness. The IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain a certain number of continuing education hours in preparation for a specific tax year. Beginning with returns filed after Dec. 31, 2015, only Annual Filing Season Program participants have limited practice rights. Learn more about this program. PTIN Holders – Tax return preparers who have an active preparer tax identification number, but no professional credentials and do not participate in the Annual Filing Season Program, are authorized to prepare tax returns. Beginning January 1, 2016, this is the only authority they have. They have no authority to represent clients before the IRS (except regarding returns they prepared and filed December 31, 2015, and prior). NOTE: Now, read this carefully: you didn't tell us what they are auditing. Was the initial audit letter with regard to a 5500? If not, you most likely cannot represent the client. They can say that they are not auditing the 5500 you prepared, they are auditing the plan. You cannot represent the client for a general audit, only for the return you prepared. Anything outside of the return, you have no authority about. And if they were auditing the 5500 but it has now gone beyond that form, they can also argue that you cannot represent the client with regard to the issues being raised. They can allow you to provide information, but they won't discuss it with you or correspond with you regarding that info if they don't recognize your authority. The IRS has gotten much more sticky on making sure those they work with have the proper authority. Good luck. Larry.

Simple answer: the TPA is wrong (it wasn't a law firm that said this, but that wouldn't make an iota of difference). From Book of Mormon, there is a song that covers this: "You're making things up again, Arnold, you're taking the holy book and adding fiction!". Yup, that's what they are doing. Tell them they are wrong. Ask them to prove they are right (they can't). Larry.

I'm going to be more direct than what I see in the prior messages. 1) She is NOT an independent contractor; she is an employee and will continue to be an employee even if they treat her as an IC. (Based on your description of what is being contemplated here). It isn't even a close call. 2) The problem will NOT be hers, it will be your client's (the business) who is misapplying the law and will be severely penalized for failure to withhold taxes on her payments. The penalties for failure to withhold are draconian. And doesn't matter if the employee actually paid all the taxes that would have been due to the gov't. 3) I tell my client (in this situation) to just tell her no. There is no reason to pay an outside attorney for an opinion UNLESS the client really thinks this is a good idea and wants to find out if he can do it (I would still tell him NO, he can't, but if he wants to waste his money on an atty....). It appears the impetus is coming from the employee. What would the client tell her if she asked for an extra 4 weeks of paid vacation? NO. Time to do the same thing here.

No question; option 2 is the correct method. Your method is most likely incorrect unless there is some very specific language in the document that would direct such handling (which I'm sure there isn't). Larry.

Agreed; 100%.

Sorry, but the question doesn't make sense to me; maybe I'm missing something. If you are using 3 months eligibility, then you cannot use any hours requirement, and that means you can't exclude part time employees. Are you thinking you can do otherwise?

And that's because what matters is the YEAR in which the 70 1/2 birthdate occurs. Anytime in that year it's an RMD if there is a distribution.