A Little Friday File Fun

And now it's time for FRIDAY FILES!

In Portland, Oregon, a couple discovered their Amazon Alexa device recorded a private conversation in their home and then sent it to a random person on their contact list. When the wife called Amazon, the company investigated and found it to be true. Amazon told CNET.com, “Echo woke up due to a word in background conversation sounding like ‘Alexa.’ Then, the subsequent conversation was heard as a ‘send message’ request. At which point, Alexa said out loud ‘To whom?’ At which point, the background conversation was interpreted as a name in the customers contact list. Alexa then asked out loud, ‘[contact name], right?’ Alexa then interpreted background conversation as ‘right.’ As unlikely as this string of events is, we are evaluating options to make this case even less likely.”

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In Camillus, New York, a 30-year-old man was ordered by a State Supreme Court Justice to move out of his parents’ house after living there rent free for eight years, the Syracuse Post-Standard reports. The man’s parents sent him numerous eviction notices and even gave him $1,100 to help him find a new place, WSTM, a local news channel, reports. However, while in court, the man refused to directly speak to his parents and argued with the Justice for a half an hour that he was entitled to an additional six months before eviction, citing a legal case he found on the internet that appeared to back his claim. The justice reportedly praised the man’s legal argument but sided with his parents and ordered him to move out, calling his demand for six more months “outrageous.” The man fired back, calling the judge’s order “outrageous.” He plans to appeal the decision. “I’m not bothering them by living here,” the man said in an interview with Good Morning America. “It’s little to no cost to them, and considering how much they’ve harassed me, I think it’s the least that they should be required to do, which is just let me hang here a bit longer and use their hot water and electricity.”

In Park City, Utah, a couple ran into a different sort of hazard during a round of golf on Memorial Day. A young moose bigger than their golf cart chased them off the links at the Park City Golf Club. The husband told the Deseret News he was getting ready to hit a shot when his wife started yelling. They jumped in the cart and made an escape as the animal headed off to a nearby pond. He says the animal wasn’t super aggressive, but it was “gigantic” so they didn’t hang around.Roundabouts can be tricky for some drivers.

If you can't view the video below, try https://youtu.be/1bdYyd87wjM.
In Sydney, Australia, a hotel valet escaped a crash, but the luxury car he was trying to park didn’t. According to the Associated Press, the valet drove the soft-top Porsche Carrera under another vehicle outside the Hyatt Regency Hotel. Emergency workers cut the driver out from the Porsche. The larger vehicle was propped up and its wheels were anchored while the vehicles were separated. The black Porsche, its hood and front bumper crunched and dented, was then backed onto a tow truck.
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Compensation and Benefit Limits Affected by Short Plan Year

If a short plan year is created when a plan is amended, terminates or is newly adopted, proration of the Internal Revenue Code annual compensation dollar limit and limit on DC plan additions will be needed.

Retirement plans may experience a short plan year upon termination, upon a new plan’s adoption or if the plan year is amended, for example.

The Internal Revenue Service (IRS) reminds plan fiduciaries that certain compensation and benefit limits must be prorated when a short plan year occurs.

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According to an IRS Issue Snapshot, a plan may not base allocations for a plan year on compensation exceeding the dollar limit imposed under Internal Revenue Code (IRC) Section 401(a)(17) or use more than this amount in applying certain nondiscrimination rules. This year, the annual compensation dollar limit is $275,000. This limit is subject to annual cost-of-living adjustments. The dollar limit applies for a 12-month period. If the plan uses a compensation measurement period of less than 12 months in calculating employee allocations, the limit must be prorated, the snapshot says.

For example, Plan A is a profit-sharing plan with a calendar plan year. This June 30, the plan will be amended to change the plan year to a fiscal year ending June 30. The amendment creates a short plan year from January 1 through June 30, 2018. The plan document provides that allocations for the plan year ending June 30 will be based on compensation for the six-month period. Because the short plan year begins in 2018, the prorated short-year limit is calculated based on the 2018 limit of $275,000 under IRC Section 401(a)(17). The prorated short-year limit is $137,500—i.e., $275,000 x (6/12) = $137,500.

The IRS also provides examples for initial short plan years and plan termination. The agency notes that the compensation limit is not prorated for employees who enter or leave the plan mid-year, provided the plan continues to use a measurement period of 12 months for the other employees.

Calculating 415 annual additions for a short plan year

In another Issue Snapshot, the IRS discusses how to adjust the IRC Section 415(c) defined contribution (DC) dollar limitation for a short limitation year, resulting from, for example, an initial, amended or terminating plan year.

Total annual additions to a participant’s DC plan account are limited to the dollar amount imposed by IRC Section 415(c). Annual cost-of-living adjustments apply to this dollar limit. If the participant’s compensation is less than the dollar limit, annual additions during a limitation year must not exceed 100% of compensation.

The limit applies to the total of:

  • elective deferrals, excluding catch-up contributions within the meaning of IRC Section 414(v);
  • employee contributions;
  • employer matching and nonelective contributions, but not restorative payments under Section 1.415(c)-1(b)(2)(ii)(C); and
  • allocations of forfeitures.

For 2018, the dollar limit on annual additions to a participant’s accounts for all DC plans maintained by an employer is $55,000.

The contribution limit for a short limitation year is determined by multiplying, by a fraction, the applicable dollar limit for the calendar year in which the short limitation year ends. The numerator of the fraction is the number of months—including any fractional parts of a month—in the short limitation year, and the denominator is 12.

Limits on annual additions and compensation are not prorated for employees who are eligible to participate in the plan for only part of the limitation year—for example, participants entering the plan in July of a calendar limitation year. Proration of these limits applies only when the limitation year is less than 12 months. However, plan provisions can limit compensation taken into account to the period of participation. For instance, a plan’s administrable definition of compensation can be defined to provide that compensation for purposes of applying the allocable share of profit-sharing contributions applies only to that portion of a plan year during which an employee is an eligible participant.

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