I am looking at setting up two plans for a controlled group. The entity structure is as folllows:

Company A is owned 100% by husband and Company A owns 100% of Company A1 and 70% of Company A2 (the other 30% are unrelated owners) Company A1 and A2 are restaurants and Company A is a management company. 
 

Company B is owned 100% by wife (married to husband above and husband and wife participate in all businesses) and Company B owns 100% of Company B1 and 100% of Company B2, Company B1 and B2 are restaurants and Company A is a management company. 
 

If we did one plan to cover all entities it would have enough participants to require an audit. What we are looking to do is have two plans (both plans would be designed the exact same) and Plan 1 would cover Company A and Company A1 and A2. Plan 2 would cover Company B and Company B1 and B2. By have two plans each plan would have less than 100 participants and neither one would need an audit. 
 

I have the following questions:

1. the affiliated service group rules don’t apply here since these entities are mainly restaurants, right?

2. Wouldn’t Plan 1 technically be a multiple employer plan because of the 70% ownership of company A2? (Doesn’t rise to 80%)

3. If Plan 1 is a multiple employer plan (which I think it is) can Plan 1 be aggregated with Plan 2 for testing purposes (coverage and nondiscrimination)? Technically wouldn’t you just be aggregating Company A and A1 in Plan 1 with Company B, B1 and B2 in Plan 2 and company A2 would be tested separately? 

4. Are there any risks to structuring two plans instead of having just one to avoid an audit? 

Husband owns a business that is predominantly non-service (warehouse, sales, capital intensive inventory) but does provide some related service such as installation of products.  The business has over 200 employees.  Wife has been on payroll but will be terminated in 2022.  Wife owns a service business with no employees.  Husband’s business enters into a contract with wife’s business starting in 2023 which generates the majority of wife’s business income.  (This, of course, is subject to the accountant determining that there is a legitimate business reason to pay such amount to wife’s business.)  Wife intends to set up a pension plan for her business starting in 2023 with her as the only participant.

Effective 2023 wife will not be an employee or involved in management of husband’s business, and husband will not be an employee or involved in management of wife’s business; therefore I believe there is no controlled group.

I don't think there's an affiliated service group -- husband's business cannot be the FSO as it doesn't seem to be a service organization; and if wife's business is the FSO I don't see how husband's business could be an A org or B org.

Any contrary opinions?

Thanks.

We have come across an interesting situation and I'm hoping for some insight here. A client who had a plan formed (i.e. plan document executed) in 2019 has not actively used the plan (i.e. zero contributions made) yet and has been generally non-responsive to our notices regarding the Cycle 3 restatement, etc. They have now recently resurfaced and want to start actively using the plan. This is a new business (formed in 2019) with no new employees (yet).

It is my understanding that the Cycle 3 restatement (under SCP) and SECURE Act amendment will need to be completed. However, my uncertainty is surrounding the CARES Act amendment.

Since there were no funds in the plan, and no other eligible employees (other than the owner), there was no option to allow for coronavirus-related distributions or loans and there were no options for RMDs. Would the CARES Act amendment still be required?

Client has a calendar year QACA plan with QACA statutory minimum schedule.  They would like to change to schedule of QACA provisions to 6% auto-enroll with  no escalation and would like to do it effective 10/1/22.  Is this allowed mid year?  And to whom do the new provisions apply?  In other word, if employee A was auto-enrolled under prior schedule at 3%  and is now at 5% deferral rate, does he need to be increased to 6% effective with amendment change or can he stay on the old schedule and just auto-increase at next increase date?

Thanks in advance for your reply.

We have several 403b plans and none have a named trustee.  The document software that we use does not even permit a trustee designation.  Yet, we are being asked for a trustee by a new recordkeeper that the plan is transitioning to.  Any thoughts?

Thank you

Hi, 

Plan terminated due to asset sale and the termination date was 06/30/2022.  the client failed the 415 testing because the testing was done for the period 01/01/2022-06/30/2022, since the plan failed testing they want to change the termination date to 09/30/2022.  as per the client if they had the termination date been set at September 30, 2022, the prorated annual limit of $61,000 would have been $45,750 and the 415 Total Excess column on the far right of this calculation would have been $0 for everyone.

The termination process has already been started and notification has been sent to participants and participants have already started requesting for distribution.  Can they change the term date now?  what will be the repercussion? 

Thank you.

Does anyone know what's involved in getting a plan to become a dual-qualified plan so a person who lives in Puerto Rico could be eligible?  Are there forms/fees involved in completing the process?

It's something I've never done and I have a client that's looking to hire a Puerto Rican citizen and wants them to be able to participate.

Thanks in advance!

We have a defined benefit plan with 21 retirees and no active participants. The employer wants to purchase annuities for the retirees now however we feel they should go through the PBGC plan termination process first. Can they purchase the annuities now, pay out the retirees and then file with the PBGC with 0 participants and $0 assets? The employer has not initiated any formal plan termination process.

Participant takes 50k loan from two plans sponsored by unrelated employers.  Subsequently, the unrelated employers become a controlled group, and now the participant has loans that exceed 50k from the new controlled group.  Is there a violation and how to fix it?  My initial thought is there is no violation, but want to get other opinions.  Thanks.  

A plan participant in a 401(k) plan elected a lump sum distribution upon termination of employment. However, he has changed his mind and now wants an annuity payout option offered by the plan. He has not cashed his distribution check. It seems that since the check was not cashed that these are still plan assets and he should be entitled to make another distribution election. However, I can also argue that once the election is made its final. Any thoughts.

The employer maintains a health plan that provides for immediate eligibility to officers of the company, and all other employees are required  to complete 60 days of service. Thus, eligibility for the cafeteria plan is tied to eligibility for the health plan. Does the bifurcated eligibility requirement for the cafeteria plan violate nondiscrimination?

Hi

Plan year is 7/1/2021 to 6/30/2022

Limitation year is plan year.

What is the 401k deferral limit?

Thanks

It seems to me that it isn't, as the "Retiree" arrangement allows participant voluntary after-tax contributions, whereas the HRA's are, as far as I know, employer-funded only.

I don't work with Health Insurance plans at all, and I'm finding the available information pretty fragmented and confusing. Is there a source that anyone knows of that gives a good, solid explanation of what these plans are, and the "rules" in relatively succinct form?

Thanks. 

Both spouses (business owners) were taking RMD's. Husband dies. Wife dies 8 days later. No 2022 RMD's taken yet. Both spouses had each other as primary beneficiaries, 2 adult children as 50/50 secondary beneficiaries.

These questions are more difficult than pre-SECURE Act, which is why I'm double-checking myself. Since there are multiple "Other Designated Beneficiaries" - the 2022 RMD is calculated as usual - using the deceased participant's age to calculate the 2022 RMD.

1099-R's , since neither spouse is alive to receive the RMD, will go to the beneficiaries (children)? For future years (although I expect children will roll over entire remaining accounts to inherited IRA's) the RMD's would be calculated on the older child's age, unless separate shares, etc.

Have I got that right?
 

Plan excludes bonuses from compensation and has a potential 414(s) failure.  Assuming ADP and ACP testing passes using 415 comp are corrective contributions required?  I read conflicting information about that.

Thank you for any guidance   

Plan sponsor is considering excluding certain HCEs, but not all, from the safe harbor from a safe harbor match.  Would such a design still be considered to be a plan consisting "solely" of a safe harbor 401(k) arrangement? 

Thanks for any guidance.

If a plan doc allows for certain provisions (for example, voluntary after-tax contributions) but none of the service providers include that in their offering, what right do participants have to demand it?

Thank you!

Can it be repaid by the estate or family prior to the Beneficiary taking a distribution?

I worked for a company that had their qualified retirement plan at Nationwide.  When i retired i requested a rollover to vanguard.  Nationwide cut me a check for the full balance of the account and I completed the rollover.  Six months later, they claim there was an error in calculating the vesting percentage and want that amount returned.  They have agreed to accept either the dollar amount of the error or the current value of the amount of stock purchased with the error amount.    Assuming I agree that there was an error, my questions are :

1. Has anyone seen this?2

2. Is there a way to correct this which would not involve selling shares of my rollover IRA and creating a taxable event

3. Can I pay this with funds outside of my IRA?  

Has anyone come across whether the NYS HWB program is required be included in compensation for deferrals and match?  I would have thought since it is being run through W2 wages (although exempt from state taxes) it would be treated like any other "bonus" and depending on the definition of compensation, included for deferral and match.  However there was specific language from the NY DOH that says "Employers are not requird to match 401k or other retirement accounts for the bonus payments under the HWB statute".  I am well aware that federal trumps state law but as this is being pushed out imminently I would like some more solid footing to consult my NY clients.

Comments appreciated.