One of our employees was overpaid in 2018 for Dependent Care FSA. She is going to pay this back in 2019. For tax reporting in 2018, should this be included as taxable income? How would it be treated in 2019 (the payback)?

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When I was deferring compensation into the Nationwide Agent deferred comp plan, I was running the business as a Sub S corporation. Upon retirement, I shut down the Sub S corporation. Now the company will only make the annual distributions payable to the Sub S corporation. Of course my bank will not cash the check because it's not payable to me. Because Nationwide Insurance refuses to update the registration, do I have any recourse?

Plan uses compensation, excluding taxable fringe benefits, as the definition of compensation for plan purposes (eligible for deferrals, match and PS). Catch-up contributions are not eligible for match. Participant A's gross compensation is $160,000 and comp less fringe benefits is $150,000. We're running the ADP test using gross compensation because it provides better results. The issue: the plan is failing the ADP test and refunds are needed. The ACP test passes. Participant A is having $5,000 refunded to him. Remaining deferrals are $11,500, which yields an effective deferral rate of 7.67% (using remaining $11,500 deferral divided by plan's definition of compensation for deferral purposes of $150,000). Match is calculated as 50% of first 5% of deferrals and 10% of next 5% of deferrals. Participant A initially received match of $4,500. Even though the ACP test did not fail, I believe that the match must be forfeited because his effective rate of deferrals has changed. I calculate the amount of match that needs to be forfeited as $349.50. Is my reasoning correct?

Now we have Participant B. Participant B is not required to receive a refund because $1,000 has been reclassified as catch-up. Because some of her deferral has been reclassified, is she now required to forfeit the match associated with these funds since catch-up is not eligible for match?

A plan excludes bonuses in the definition of compensation. If the plan can pass 414(s) testing, I know I can include the bonuses to calculate the ADP's. My question is, can this change from plan year to plan year (i.e. one year include bonuses in ADP testing, the next year exclude bonuses in ADP testing)?

Client is interested in a lump sum window. They did one a couple of years ago with limited success, but want to consider "sweetening the pot" to improve the take-up rate. Is there a way to enhance the lump sum value without also increasing the annuity benefit? My thought is no, because the QJSA must be as valuable as any other option except a lump sum determined using applicable mortality and interest. So I don't think I can just use better AE assumptions, like an artificially low interest rate, to drive up my lump sum, correct? Can I use different overall assumptions and/or calculation methodology just for the window period -- because it's not considered part of the accrued benefit? For example, could I add 3 years to a person's assumed age and/or decrease the actuarial reduction for early commencement, and calculate the lump sum as the present value of the immediate annuity rather than the annuity deferred to NRA? I'm sure I can do the first part, but not sure about changing the lump sum calculation methodology. The goal is to enhance the attractiveness of the immediate lump sum compared to the immediate or deferred annuity.