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Showing results for tags 'bonus'.
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We represent Buyer in a carve-out transaction. The subsidiary that we are buying is the legal employer of its employees, but HR functions are centralized at parent level. Several employees of sub who are coming to buyer will receive retention bonuses post-closing, paid by the Seller. The legal question is whether, where the services are not provided (and have not been provided) directly to seller but to PHS and the consolidated group is being split by the transaction, which is the proper entity to conduct payroll withholding on payments made after the closing?
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Employer has 1 HCE (the owner) and 75 eligible NHCEs. Wants to adopt a 3% safe harbor 401(k) plan. Owner's compensation is normally paid as $120,000 base pay and $150,000 year-end bonus. The NHCEs receive tips amounting to about 50% of their compensation. If the plan excludes bonuses and tips for purposes of all allocations, would this still retain its safe harbor status? If so, it seems like the employer is getting away with a safe harbor contribution of only 1.5% of compensation. We understand that it might eventually become top heavy with all the turnover they have, but that could take several years.
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We have a client who has failed to withhold deferral payments on bonuses for several years. The affected participants will also be due a match contribution on the missed deferrals. This affected both HCEs and NHCEs and will be corrected under VCP. A question is coming up as to what happens with the prior ADP/ACP tests. This plan has never used the ADP/ACP safe harbor. They did fail testing a couple of times in the years affected and a few passes that were close to the limit (based on testing where bonuses were not counted for deferrals and match). Are we reading the EPCRS procedure (section 6.02(2)(d) pasted below) correctly to interpret it as requiring that the ADP/ACP tests must be rerun for each of the affected years (likely resulting in late ADP/ACP corrections for the prior years that will also need to be corrected under VCP)? We'd like an outside thought before we implement any corrections. Thanks. (d) The correction method should not violate another applicable specific requirement of § 401(a) or 403(b) (for example, § 401(a)(4), 411(d)(6), or 403(b)(12), as applicable), 408(k) for SEPs, or 408(p) for SIMPLE IRA Plans, or a parallel requirement in Part 2 of Subtitle B of Title I of ERISA (for plans that are subject to Part 2 of Subtitle B of Title I of ERISA). If an additional failure is nevertheless created as a result of the use of a correction method in this revenue procedure, then that failure also must be corrected in conjunction with the use of that correction method and in accordance with the requirements of this revenue procedure.
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Hi, I have a non-profit who is wanting to make an non-elective contribution however they are funded by a grant which restricts them from paying bonuses from the grant money. I do not believe Non-Elective contributions are considered bonuses since there is no "achievement of objectives" associated with the contribution as the below grant language indicates. I also believe that Non-Elective contributions are benefits to employees which helps with employee retention. Does anybody have any good references that I can provide to the client so they can be more at peace with making the non-elective contributions? I have found the DOL's definition of a profit sharing plan and no where does it state bonus plan. Grant's Exclusion of Executive Compensation In setting or approving base compensation and benefits, the Board of Directors shall consider the market rate for the role and skill level of the individual to perform in the role as well as the notional projections included in the proposal submitted on behalf of Company A. Executive bonuses shall be awarded by Company A's management or the Board of Directors based on the achievement of objectives as set forth by management or the Board. However, no bonuses paid to Company A's executives will be funded from appropriated funds, but only from Program Income as defined by Circular A-110, e.g., membership fees to Company A.
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- profit sharing
- nonprofit
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