ERISAAPPLE

Was the contribution made in 2018 or 2019? I think the plan might be able to return the contribution to company A. I would argue it is a mistake a fact or maybe it is not deductible under 404 (though I admit I would want to research both in more depth). You might also argue the contribution is not a plan asset because the plan never had a right to that money. For example, if by mistake a bank erroneously sends $10 from my checking account to a qualified plan that is unrelated to me, and the trustee erroneously accept the $10, that doesn't make the $10 a plan asset. Similarly, if a mutual fund credits earnings to the wrong plan, those earnings are not a plan asset of the wrong plan. Its the same thing here. Company A made a mistake and sent a contribution to the plan that doesn't belong to the plan. The plan has no right to the money. I know a bank or a mutual fund is not an employer for purposes of 403, and arguably Company A is here. I just think this is different than returning money to a sponsoring employer. But again, I would want to look at that more closely.

Is anybody aware of a publication that has a good discussion of the difference in taxation between annuities in general and the simplified method of taxing annuity payments from a qualified plan under IRC Section 72(d)?

I don't understand what you mean when you say the company has "PTO purchase via 125 plan." Do you give them a choice to take PTO in cash or elect a pre-tax benefit?

OK, I am having one of those moments where I think I am going crazy. I didn't know where to post this, so I selected this board. Section 1 taxes "taxable income." Section 63 defines "taxable income" by reference to gross income in Section 61 minus deductions. I know the deductions for AGI are not taxable, but I can't find that connection in the IRC. Where does the definition of AGI in Section 62 fit into all this? I know it is an above-the-line deduction, and I know this is very simple on the 1040, but where is the missing-link code section?

What new rules allow participants a longer period to repay their loans? I honestly am not aware of that rule. Are you talking about the new rules that allow for a longer rollover period for loan offsets?

Don't get me wrong. I think the plaintiff would have a good chance of success, which is why I mentioned it in the first place. I'm just saying it is not necessarily going to be easy. In a legal malpractice lawsuit you have to try "a case within a case": that's why there are two cases. It may be that both cases here would be relatively simple to win. But no litigation should be pursued lightly. As in almost all cases, you start with a demand letter and hope the attorney would just pay.

I was My intent was to reflect that any malpractice suit is going to be difficult. In a malpractice case, most states require you to hire an expert witness. You also generally have to prove two cases. The first case you have to prove is you are entitled in the first place. The second case you have to prove the reason you lost that entitlement, when you would otherwise have won, is because of the attorney's malpractice. On top of that you have to deal with the usual costs, time, and delays that inevitably comes with any litigation. I agree that the OP has a good case assuming the facts as presented and assuming there is no SOL problem, but nonetheless prosecuting any case to completion and collection can be quite burdensome and and expensive.

You might have a malpractice claim against your attorney, but that is going to be a tough row to hoe. For starters you could have statute of limitation issues, and the amount involved may not be worth the cost and effort of pursuing the claim.

These arrangements are rarely subject to 409A because they always get paid when vested. If they are, and its not reported correctly, you've got a mess on your hands.

If it is reported as taxable when vested, it is a short-term deferral. Report it in Box 7 of the 1099-MISC as payment for services to a non-employee. If it is not a short-term deferral period and there is a 409A violation, that also is reported in Box 7 of the 1099-MISC as well as Box 15b. If it is not a short-term deferral and there is no 409A violation, no reporting is required. See the instructions to Box 15a of the Form 1099-MISC.

I would run this one by an attorney. If your client is the buyer, I don't see how they can withhold if they never have the money in the first place (I take your statement that the bonus will be "paid by the Seller" very literally and narrowly). What do they care if the withholding is done or not? Sure they might want to make sure the employees get paid, but there are other ways to verify the payment. As far as the IRS is concerned, I'll doubt they will care as long as somebody does the withholding and deposits, the payment is reported, and the taxes are paid. This is kind of like a staff leasing company situation. The services are performed for somebody else, but the staff leasing company pays and does the tax withholding.

Agreed. The instructions to the Form 5500 EZ says an incorporated sponsor must be owned entirely by the participant or the participant and spouse for the plan to be a one-participant plan.

I've never heard of this. This is fascinating. So Carol, if you have two plans - one for employees only and one for ICs, then you have two non-ERISA plans, but if you put both in one plan, do you have an ERISA plan that violates the exclusive benefit rule?

Why would the committee, who is responsible for millions of dollars of other people's money, want to interview the people who will actually manage that money? That's a rhetorical question. Please don't answer. Whoever is telling this to your client is one of the few who actually cares. The reason you have never heard it is because so few care.

I have negotiated many. I admit though that the clients who get that are large enough to negotiate for that clause. They contracts should have it. The vendors hold themselves out as professionals who can operate plans in compliance. That is the very reason clients hire them. In fact, they hold themselves out as professionals who can tell the clients how to be compliant. If they make a mistake that is totally their fault and no fault of the client, they should be held to what they promise.