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Message Boards Digest

August 21, 2018

Here are the most recently added topics on the BenefitsLink Message Boards:

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calexbraska created a topic in Nonqualified Deferred Compensation

FICA Taxes on Nonaccount (Defined Benefit) Top Hat Plan

We have a nonaccount balance plan (i.e. a defined benefit plan) that is a top-hat plan. Under the Plan, a participant is to receive a set amount per month for life, with a 50% survivor benefit to the surviving spouse for life. It appears we can take FICA into account from the offset, since the amount is readily ascertainable under Code Section 3121(v)(2). I get how that works for the set amount to the employee for life -- we just base FICA on the present value of is benefit. But how do we deal with the survivor benefit? Is the present value of that amount also taken into account for FICA purposes on the employee's tax filings? If so, how does the surviving spouse report the payments in the years they are paid?
Number of replies posted  2 replies      Number of times viewed  27 views      Add Reply
 
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justanotheradmin created a topic in IRAs and Roth IRAs

Sledgehammer Penalty for Mismatched Reporting: IRS Says Rollovers Are Taxable Income

Five different participants rolled traditional IRA money into their 401(k) plans (4 separate plans, all different employers) in 2016. The 1099-Rs seem correct, showing a code G since they were all direct transfers, and zero taxable amount. Each of these individuals have received letters stating the amounts rolled over were taxable, listing the amount of tax and interest due. In at least one instance the letter even mentioned that the 1099 had a code G on it. The common denominator may be that none of these individuals reported the rollover on a personal tax return; rather than reporting the rollover with zero listed as taxable, I think it was left off the return completely. Has anyone else had a problem with the IRS issuing letters stating that an IRA rollover is taxable income?
Number of replies posted  7 replies      Number of times viewed  69 views      Add Reply
Author's photo

Pammie57 created a topic in SEP, SARSEP and SIMPLE Plans

SEP Contribution When Sponsor Becomes Part of Controlled Group Mid-Year

Company A (a LLC 1065) is owned by Owner 1& 2 from January 1 through August 31 of 2018. They have one other employee. Company B is owned by Owner 1 and two other unrelated people from January 1 through August 31. They have 20 employees. As of September 1, Owner 2 buys shares in Company B. At September 1, the ownership of both companies is as follows: Company A -- Owner 1: 49%; Owner 2: 51%. Company B -- Owner 1: 51%; Owner 2: 40%; Other unrelated owners: 9%. So as of September 1, they're a controlled group. If that's correct, then the other question Company A has is, "Can we make a SEP contribution for the period Jan. 1 through Aug. 31 for our employees only?"
Number of replies posted  3 replies      Number of times viewed  23 views      Add Reply
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AATPA created a topic in 401(k) Plans

BRF Testing Needed Here? Different Vesting Provisions in Plans of Controlled Group Members

Controlled group members, one non-profit with a 403(b) and one for-profit with a 401(k) -- same vesting schedule but the 403(b) excludes service prior to the effective date of the plan (meaning the 401(k) plan is giving more service credit). Must I perform BRF testing? The 401(k) plan has had no HCEs in prior years but does have one in 2018. The 403(b) plan usually has 3 HCEs.
Number of replies posted  2 replies      Number of times viewed  36 views      Add Reply
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cheersmate created a topic in Retirement Plans in General

Partial Plan Termination When One of Three Participants Leaves?

Employer ABC sponsors a 401k plan. There are 3 participants. ABC sells practice location #1 of 2 to an employee Z (Non-HCE). The new owner Z does not continue the ABC Plan as a result of buying the practice location #1. Is this a partial plan termination and should Z's account in the ABC 401k be 100% vested?
Number of replies posted  9 replies      Number of times viewed  72 views      Add Reply
Author's photo

HollyB created a topic in Defined Benefit Plans, Including Cash Balance

Waiver of Section 4980F Excise Tax without a Letter Ruling?

Does anyone know of a way to get the excise tax under IRC 4980F for a late 204(h) notice waived other than a letter ruling request? I can't find any other way to get a waiver and the user fee is too high to make a letter ruling request a viable option.
Number of replies posted  1 reply      Number of times viewed  27 views      Add Reply
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ML68 created a topic in 401(k) Plans

Fee for Determination Letter Application?

I'm submitting our individually designed 401k plan document to the IRS for approval using forms 5300 and 8717. Form 8717 has instructions for finding determination letter fees, but the hypertext links are broken. What fee applies to our plan? We are not exempt from fees because we do not have a non-HCE.
Number of replies posted  1 reply      Number of times viewed  45 views      Add Reply
Author's photo

bzorc created a topic in Retirement Plans in General

Contribution Deadline for a C Corporation

For 2017, the filing deadline for a C Corporation was moved to October 15, 2018. Did that also move the deadline for making a contribution for 2017 to October 15?
Number of replies posted  3 replies      Number of times viewed  65 views      Add Reply
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