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My name is S. Derrin Watson and I approve of Ilene's message. I add that controlled group status unites two employers for all purposes of Code 401. That includes 401(b), where we find the new statute. And, for what it's worth, I don't take off my controlled group hat except when I go to church. 😀

Plans can borrow to purchase real estate assuming the trust language in the document authorizes it (typically it does). This could create UBTI unless the loan meets the acquisition indebtedness exeception in IRC 514 (I forget the subsection at the moment). But good luck getting a conventional lender to loan to a plan. Lenders can't qualify plans using standard metrics, and they pretty much all want to use standard metrics so their loans can be sold. They will make suggestions such as telling the client to buy the property personally and then quit claim it to the plan after the financing is in place, or that they want the client to guarantee the loan. These sorts of lender workarounds typically create PTs.

I really appreciate everyone's input. No matter how long we do this there will always be something new to learn.

There's a Smokey and the Bandit joke in there........

I stand corrected and my apologies!

4% isn't the maximum. You can do 100% up to 6% and still satisfy the ADP/ACP requirements.

If you want to get the match even higher, I think the third tier could be, say, 300% up to 6%. Tier 1: 6% of $125,000 = $7,500 Tier 2: 4% of $125,000 = $5,000 Tier 3: 300% of 6% = $22,500 Total Match: $35,000 You would have to watch out for deducibility, but the match is only 28% of pay.

Answering your query would require reading the complete set of the plan’s governing documents, might require considering a relevant State’s law, might require considering the church’s internal law, and might require considering other facts and circumstances. Here’s a partial selection of a few points one might consider: Is the plan an individual-account (defined-contribution) plan, or a defined-benefit plan? (Unlike most other § 403(b) plans, church plans have some variations and transition rules that might allow a defined-benefit plan.) If this is a multiple-employer plan, is the whole of the plan’s assets available to provide benefits to any employer’s participants and their beneficiaries? Or is there a separate subplan for each employer? What does the plan’s governing document say about whether a mistaken contribution remains in the plan’s assets, or is returned to the employer? If the document provides a return of a mistaken contribution, do your facts fit the plan’s definition of what is treated as a mistaken contribution? Are there other terms about an employer’s participation in the plan? Perhaps more practically, what does the church plan’s administrator say on whether the employer may get a return?

Well, this is no fun. Have already assisted 2 upset/frustrated clients who received these much delayed letters and believed we had dropped the ball, because you know, they don't tend to read the letters and its not necessarily easy for them to always understand the letters. I hope there aren't many, many more of these on the way.

I think we need more details here. The entity is owned in a trust. What is the "earned income" that the person is receiving? w-2? I think that counts. If the LLC is taxed as an S corp, then the pass through on the k-1 aren't earned income for anyone at all. If its' taxed as a "partnership" (with a single owner making it a disregarded entity) then the trust is the receiver of the "compensation" but I'm not sure that counts as earned income for A.

A SIMPLE IRA is required to cover all members of a controlled group. A SEP generally is required to cover all members of a controlled group (there are exceptions) but it definitely has to be tested. My advice is that this isn't going to work. He's likely going to need a 401(k) for the controlled group.

Sounds like a Plan Administrator who took their ERISA duty to retain records required to pay all benefits as merely a suggestion. Does the Employer truly not have the records or do they just not want to search for them? Like are they in some storage they don't want to wade through or were they actually destroyed? Because like someone above mentioned I find it hard to believe there were no W-2s issued for the participants in question.

BG, this is not a slam on you, but I find it impossible to believe they can't track down a w-2 anywhere. Payroll company? CPA? Nobody?

They have put themselves in a bad place by prior bad decisions. How did they pay them when working without a SSN? Before everyone else was paid out declare them lost and it would have looked less self serving to forfeit and reallocate to all the rank and file mostly. At this point it is a bad choice by declare them lost participants and follow what the document says to do if that happens. Hopefully it says forfeit and reallocate. Not pretty but I don't see how you fix it since they don't have a SSN. I am not saying it is a good answer. Nor can I cite anything to support it. Likewise, I think a DOL auditor or IRS auditor will not like the answer. But the right answer was in the past- get the SSN when you hire them and no one can go back in time and do that.

Good questions. I think you look at the merged plan for 2022. Bigger picture - consult with buyer to do the right thing and fully vest people losing their job as result of the transaction regardless.

I have NEVER seen a SARSEP that was done properly. And I do mean NEVER. They were advertised like the text book: BRAIN SURGERY: SELF TAUGHT!