Tom

Medical group sells practice July 31, 2018. Former doctor employee terminated employment in 2016 and is 20% vested in PS source. The terminated doctor has not incurred forfeiture since he has not been cashed out nor has he had 5 break in service years. We believe full vesting must occur here. But the client does not want to provide full vesting due to termination circumstances. I'm right - right? Thank you in advance for comments. Tom

Employer has no 401(k) plan but has a 457b plan covering only the one key employee. This key employee makes elective deferrals to this plan. The employer wants to start a safe harbor 401(k) plan. I assume the 457 is considered a deferral plan and thus the Oct 1 start up of 401(k) would not be possible for 2018 but instead they would have to wait until 1-1-2019. I realize the answer seems obvious but I'm asking in case there is an exception to non-profit 457b plans not counting as true deferral plans for this purpose.

We have a small business w 10 employees and the business offers health insurance. So the QSEHRA is not available. Two employees have chosen Medicare instead of the employer health plan. The employer pays 75% of the health insurance premium and employee 25%. The employer wishes to reimburse the Medicare-covered employees 75% of the Medicare premium they incur. There appears to have been a pronouncement in 2015 which allows for this provided certain conditions have been met which they have in this case. So it appears to be allowable. Questions: Is this still an allowable benefit? Does there need to be a written plan? If so I suppose it would be an HRA. Can the HRA only address and cover the Medicare reimbursement issue? I assume the reimbursement would be non-taxable. Comments? Thanks

Loan was initiated by owner of a business for himself in 2017. Loan repayments were not started by his payroll clerk. And so six months go by without any loan repayments. The loan was re-amortized over the remaining life of the loan and repayments started. A VCP filing is being prepared. Question for the 2017 5500 - is there a prohibited transaction to report. It seems this just adds insult to injury as the IRS will likely approve the fix under VCP and the use fee will be paid. Seems like double jeopardy to also report it as a prohibited transaction. Comments? Thanks in advance.

Just met with a client. There are 4 companies 100% owned by one individual and his spouse. So this is clearly a controlled group. Since a Simple IRA can only be adopted by one employer (there is no way for a participating employer to sign on), I suppose the only answer here is for each of the 4 companies to set up their own Simple IRAs. I was told by an ERISA attorney at one time that a Simple plan is meant to be just that - simple. and so there is no such thing as a second participating employer. But separate Simples should work. We are a TPA firm and work with k plans. I assume some of the record keepers will handle SImple IRAs such as American Funds RKD, Hancock, etc? Comments? Thanks

Doctor and Lawyer are married and have a child under age 21. Doctor (our client) has 401(k) plan. We are inquiring as to the spouse lawyer as to whether he maintains a plan (our first year admin). Disregarding the child, they would not be considered a controlled group as they meet the 4-part CG exception and they are not in a community property state. But my read is that the child trumps all this and does cause them to be a controlled group regardless of the fact that they are not in a community property state. Comments? Thanks Tom

Takeover plan excludes HCES from the safe harbor match as it has non-physician professionals who are high paid and the owner physician does not want to give them the match. One of them made just less than $120,000 in 2017 and so we started up the pay period SH match for 2018 and the owner is not happy about it. Of course the plan cannot be amended at this point for 2018. Looking ahead though, if the plan was amended for 2019 to exclude this class of employees from the SH match (instead of excluding HCEs), my concern would be testing. There would be say 4 HCEs including the owner excluded and maybe one NHCE professional how would ADP testing be done on this excluded/disaggregated part of the plan? FYI - the plan is not top-heavy at this time - thankfully! Comments? Tom

We have a 401(k) client where the plan sponsor/corporation became owned by an ESOP in 2017. I don't know any more about this transaction other than the company is now owned by an ESOP. This company has sponsored a 401(k) plan and still does during 2017. Some research I did indicates Code Section 318 states that the constructive ownership of stock does not apply to shares owners by a 401(a) employee trust which is exempt from tax under 501(a). So it seems since the ESOP is the owner of the company, the 401(k) plan no longer has owners for purposes of HCE and key employee determination. All shares of the company previously owned by all the family members are now owned by the ESOP and don't attribute to them personally is my take. The plan is subject to ADP testing but perhaps will be a non-issue if attribution does no exist. I also have to question whether officers exist for top heavy purposes. the plan is a long way from being top heavy thank goodness . I'm told there are board members of the ESOP but the client is implying there are no longer officers. If this is the case there may be no testing whatsoever. But I'm approaching this with much caution! Comments anyone? Thanks

We have a client who maintains a safe harbor 401(k) for 2017. His spouse has a separate business and she wants to maximize a plan. They do not participate in each other's businesses in any way. The have a child who turned 21 in July 2017. Spouses are considered a controlled group for testing purposes when there is a child under age 21. The spouse has not opened her SEP or solo K yet and so at this time there is no child under 21. But I will advise them that I assume the rule for 2017 is - a child under age 21 AT ANY TIME of the year unless I find otherwise. I'm not able to find anything definitive yet. Comments? I was hoping to have her open a solo-k plan for 2017 and maximize if not a controlled group. If deemed to be a controlled group, then I will have her sign a participation agreement with her husband's plan. But that leads to another questionable item - can she defer $24,000 in this plan as her business is just now adopting his plan effective back to 1-1-2017 as a sole proprietor. Or would her deferral be subject to ADP testing? Tom

Has anyone had to file a late Form 8955. We have a new client and this was not filed for 2016. It appears that DFVCP- is available and I am researching further. There is no formal correction program but I saw instructions from the IRS saying file under DFVCP which I suppose means re-filing the 5500 and paying the penalty. Does anyone have experience with this? Thank you, Tom

We have a doctor client who shares employees with other doctors. The 6 doctors operate under different tax entities. One doctor pays all the employees through his payroll for convenience. Their accountant charges the other 5 doctors their share of wages. The accountant tracks hours worked for each physician and allocates compensation accordingly. Some employees work for all and some only for one doctor or several doctors. So at the end of the year we get a census showing hours/wages for each physician and a total. I understand the very old regulations for shared employees are still in place which say you look at the total hours for all employers in determining the 1000 hours threshold and then allocate the employer contribution only on the wages paid applicable to a particular physician's business. My concern of course is - would the IRS support their own regs in this case? The good thing is that only 1 of 6 physicians even has a plan so in looking at the group as a whole, coverage likely would pass. I believe the group has a common marketing name and phone number. I don't know how they bill insurance - I hope and fully expect that to be filed under each of their separate business EINS. Thoughts? And thank you in advance. Tom

We have a prospect who asked us to bid on the profit sharing plan. At the presentation I earned for the first time they had a 401(k) bundled with a record keeper. The record keeper has no role with the profit sharing plan. I find out the top heavy test has not been performed for the PS plan. And when answering the record keeper's year-end questionnaire, the plan sponsor correctly indicated there was another plan but was told that the PS plan did not affect the k plan top heavy test. Of course the PS plan at a minimum has to be top-heavy tested. I have not researched this thoroughly as it just came up. But what I saw so far is that 2 plans of an employer must be aggregated for top heavy purposes when there is at least one key employee in both plans "AND" the plans are aggregated for passage of 410(b) and 401(a)(4). I question the word AND in the source I saw. So if both plans include a key employee but pass 401(b) and 401(a)(4) on their own, then there would be no aggregation is required for top heavy purposes. That seems to be a big loophole.

So after deferrals stop for 6 months, who is to initiate the re-start of elective deferrals? Seems the plan sponsor would monitor this and automatically re-start upon the expiration of the 6-month period. Or I can see asking the participant to complete a new election. Thoughts?

If a plan is discovered to be top heavy for 2015 and a corrective TH contribution plus earnings is made now I assume this contribution is accrued into the 12/31/2015 non-key balances in determining top heavy status for 2016?