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Found 6 results

  1. Situation: $4,000 payroll from April 1 2019, not deposited until January 10, 2020. Plan year is calendar year, so it requires 2019 and 2020 Form 5330 fillings. Calculated interest: 2019 $310 2020 $34 4975(a) First Tier Excise Tax calculation (entered on Form 5330 line 3a): 2019: $310x15% = $46.50 2020: ($310+$34) x 15% = $51.60. Calculation from Exhibit 4.72.11-6 on https://www.irs.gov/irm/part4/irm_04-072-011#idm139654188128704 4975(b) Second Tier Excise Tax calculation (entered on Form 5330 line 3b? 2019 None 2020: A: 100% of the 2019 Amount of prohibited transaction reported on 2019 filling $310 B: 100% of the 2019 amount of total prohibited transaction $4,000 + applicable Interest $310: for the total of $4,310? Which would make total excise tax due with 2020 filling of either ($310 + $51.60) = $361.60 or ($4,310+$51.60) = $4,361.60? Thanks for your help!
  2. A plan fails the ADP test for 2018 and refunds are made by March 15, 2019. It is later discovered that there was an error in the test and additional refunds need to be processed. Is the excise tax due on the full refunds or only those made after March 15?
  3. We filed a VCP for late RMDs in May. Case has not been assigned. Waiver of excise tax requested but what do you recommend we tell the distributee regarding his tax return due April 15? Doubtful we will have an answer by then. Considering giving him a letter to attach to his return.
  4. This has been discussed on these boards, but some conflicting opinions from elsewhere have made this. IRC ยง4975 does not apply to an ERISA 403(b) plan, but ERISA 3(2) includes 403(b) plans. That, in turn, makes an ERISA 403(b) plan subject to the prohibited transaction rules, but not under 4975, under ERISA 406. Does this cause an ERISA 403(b) plan to be subject to an excise tax that requires Form 5330, thus completing the section of the form under 4975 and paying the 15% excise tax?
  5. Employer starts two new plans in 2014, DB and PS. They mistakenly think the DB plan is subject to PBGC coverage. Oops, they find their plan is not PBGC covered and 404(a)(7) applies. Eligible Payroll: $1,000,000 Total contributions, both plans combined: $400,000 PS contribution made during 2014: $100,000 DB contributions: $300,000 made during 2014: $280,000 (covers the MRC) made during 2015 for 2014: $20,000 Amount deducted on the 2014 business tax return: $400,000 (already filed). Recommendations? Can the employer make an election under 4972(c )(7) to avoid the 10% excise tax? Or is the excise tax avoided regardless of this election? Must the 2014 business tax returns be amended? Or does the deducted contribution carry forward into 2015 to count against the 2015 deduction limit? Schedule SB will show all contributions made during 2015. If the employer does not amend the business tax return for 2014, should the Schedule SB also include the $20,000 contribution made in 2015 but deducted on the 2014 tax return?
  6. How does the Cadillac tax apply to an EGWP plan? Under the ACA, there is a 40% tax on the excess cost of health insurance. A Part D Employer Group Waiver Plan ("EGWP") provides insurance that supplements Medicare. How do the Medicare reimbursements get treated for Cadillac tax purposes? Example: Assume monthly cost of EGWP plan is $1,000 and that Medicare pays for $750 and employer/insurer pays for $250. Is the total $1,000 considered the cost of health insurance or just the $250 paid by the employer/insurer?
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