Would appreciate thoughts on this analysis regarding excluded interests under the controlled group/common control rules.

LLC (taxed as partnership) is owned 50/50 by two S corps (S Corp 1 and S Corp 2). S Corp 1 is owned 100% by Individual 1. S Corp 2 is owned 100% by Individual 2. Individuals 1 and 2 are unrelated. Individual 1's spouse is an employee of LLC. The LLC operating agreement has standard terms regarding permitted transfers, right of first refusal, etc. that constitute substantial restrictions on the right of S Corp 1 or S Corp 2 to dispose of LLC interests. 

For the parent-subsidiary controlled group analysis, the stock exclusion rules apply because each parent S Corp owns at least 50% of the subsidiary LLC. For purposes of whether S Corp 1 and LLC are in a parent-subsidiary controlled group, the stock exclusion rules would result in at most 50% direct ownership (or 0% ownership if stock deemed owned by Individual 1's spouse is excluded). The other 50% is owned by an unrelated person and is not excluded under any other rule, so S Corp 1 and LLC cannot be in a parent-sub controlled group.

However, when looking at S Corp 2 and LLC as a parent-sub group, it seems that S Corp 2 would be deemed to own 100% of the outstanding interests in LLC. S Corp 1's 50% interest in LLC is deemed owned by Individual 1, which is then attributed to Individual 1's spouse, who is an employee of LLC. That 50% interest deemed owned by an employee of LLC is subject to restrictions in favor of LLC, so is excluded, making S Corp 2 the deemed 100% owner of LLC.

So the end result is S Corp 1 and LLC are not a parent-sub group, but S Corp 2 and LLC are. 

It seems odd that the people with more involvement in the ownership and operation of LLC avoid affiliation, but the person with less involvement is affiliated. I also see the logic that having an employee own the other 50% gives S Corp 2 more "leverage" in the situation, but the employee's ownership is only deemed through another equal co-owner. 

In any event, would appreciate any thoughts.

          A 401(k) plan has about 10 participants in it. There is the owner, the owner's wife (who is terminated) are both 100% vested. Both the owner and wife also have individual IRA's. Here's the question: the owner died several months ago. Is there anyway that his 401(k) account balance, either directly or indirectly, can be rolled into his wife's 401(k) account?

We have a client that is the Plan Administrator to a very large number of plans.  Is anyone aware of any way the Plan Administrator can bulk sign all the filings or does the Plan Administrator have to sign each Form 5500 individually?  In short, is there a way to sign all the Form 5500s at one time?  Thanks. 

Hello, 

I left the firm where I began my 401k contributions. Upon leaving, I transferred my 401k balance to Wealthfront. 

I recently deducted the full balance. I have two medical ailments requiring surgery.

Am I to contact my ex-firm to determine whether the medical procedures I'm anticipating will be covered under their hardship deduction? 

Thank you. 

I have a client asking to include after-tax contributions (not a Roth) up to the DC Maximum for two partners in a Plan.  Are there any ramifications for doing this?  I haven't had to handle a plan with it in some time.

Thanks!

Seems that the majority of 5500-EZ's that are filed late and then use the IRS Penalty Relief Program have a similar reason in that they simply didn't know they were supposed to file (ie upon reaching $250K in assets).

Anyone have experience with submitting a Reasonable Cause for late filing that they Plan SPonsor did not know of the requirement and is now trying to make good on their obligations?

Another question - when reviewing the IRS instructions, it doesn't seem clear if a 5500-EZ should be submitted to the standard address, as well as to the Penalty Relief address, similar to filing for relief for regular 5500's.

One of 2 brother/sister companies covered under one 401k was purchased.  Buyer already has a plan and doesn't wish to merge or transfer and only wants one plan post acquisition.  Does entire brother/sister plan have to be terminated before acquisition to avoid the successor plan rule issues? Should they separate into 2 plans and then terminate the soon to be acquired company's 401k before acquisition?  

Client instructs participants to make elective contribution changes in their payroll system.

In error, the online elective contribution change feature was activated on the record-keeper's website.

Several participants made elective contribution changes on the record-keeper's website despite instruction from the plan sponsor to only make changes in the payroll system.

Does the sponsor need to recognize the changes on the record-keeper's website?

Thanks in advance for anyone's thoughts on this!

Hello Pension Gurus,

Is it required that a direct rollover check from a 401k to an IRA have the verbiage "FBO Participant Name" in the Payable To?

The receiving IRA Custodian has asked us to take the "FBO" off the check.

Just to note:  This is a direct rollover via participant distribution request, not a trustee to trustee transfer. 

Group:

Does anyone have a sample (or a resource/guide/service

they've used) questionnaire they pass out for participants in an employer

sponsored plan? like a 401k, Defined Benefit, Defined contribution plan. 

For instance, a questionnaire asking if the employee/participant

liked a certain provision of their benefit plan (like a 401k matching

provision) among other questions.

Something to gauge if the employers intention and reasons for setting

up the plan are being met on an annual basis.

Thoughts and comments appreciated.

Warmest,

Joe

The 125 plans I've seen use disability insurance, and disability is determined by the insurance company, so the "new" DOL disability procedures wouldn't apply. Are there 125 plans out there where the situation is otherwise, so that the plan/SPD must be modified to take these procedures into account?

I am the owner and founding partner of a midsize TPA firm interested in acquiring a similar organization in the North East.  Please respond here or by phone at (516) 238-9639

Plan sponsor terminated their SIMPLE IRA plan 12/31/18.  They started a new 401(k) effective 1/1/19.  Employer just now realizing they missed depositing SIMPLE deductions/deferrals for payrolls occurring in December, 2018.  

Will it violate the exclusive plan rule to deposit the SIMPLE deferrals now (in 2019) along with lost earnings?  I'm thinking "no" because we are correcting late deposit of deferrals for 2018.

I'm probably overthinking as usual.

Any input greatly appreciated!!

I've seen wrap documents for Section 125 plans, that allow you to file just one 5500 form for all of the benefits that fall under the 125 plan. I've also just seen reference to a "Mega Wrap" document, which incorporates the cafeteria plan and underlying benefits, in addition to certain health/welfare benefits that are NOT under the cafeteria plan.

Is this a viable technique for doing only one 5500 form? Ignoring document issues, for now anyway  - just interested in the 5500 question. Thanks. 

I was looking through the loan regulations and couldn't put my fingers on anything.  Is there anything in the regulations that limits or doesn't allow a participant who has defaulted on a loan previously from taking a subsequent loan?

Thanks in advance!

I have a very simple question with what seems to be a very elusive answer:  When did the universal availability requirement first apply?

I'm looking at an early 1990s document from a major provider that has an age 21 and one year of service requirement in order to be eligible for deferrals.  I'm struggling with how that would have been permissible.  Code Section 403(b)(12)(A)(ii) was certainly in effect back then.

This is a general question regarding the assumptions used to value a QDRO for a defined benefit monthly accrual.

Is it appropriate to use the current year Applicable Table with the current 417(e) rates for both a public and a private pension plan payment.  Or, is there some other industry standard that is used.  Does it make a difference if the plan does not allow a single lump sum payment to the alternate payee?

Dealing with a cash balance/DC combo.  The Plan defines Comp period as the 12 month fiscal period ending within the plan year.

Example: 3/31 Fiscal Year End.  The 12 month comp period would be 4/1/2017 – 03/31/2018.

This plan has 4 entities (control group) participating. 2 w/ 3/31 fiscal years and 2 w/ 12/31 fiscal years.

The employer switched fiscal years after the completion of the 3/31 fiscal year to a calendar year.  I technically have two fiscal year ends (21 months of comp) within the 12 month plan year. 

4/1/17 – 03/31/18 and now 4/1/2018 – 12/31/18.  The plan year has not been changed and continues to be a 12 month calendar year.

We want to be able to include all 21 months of compensation for funding purposes during 2018 and then going forward 2019’s compensation will follow the 12 month plan year.  How do we include compensation from 4/1-17 – 12/31/18 for funding purposes for those 3/31 fiscal EE’s that had their fiscal year switched to 12/31?  

Can this be accomplished in the 2018 plan year?

For sake of simplicity I will just use an example

1000 shares in suspense in 2017

Original amortization schedule is 20 payments of 160 (total payments of 3,200)

160/3,200 x 1000 = 50 shares released with $3,040 in remaining loan payments

Year 2018 the amortization schedule was updated by the valuation company and is 20 payments of 155 (total payments of 3,100)

should the 2017 share release be recalculated to reflect this updated amortization schedule? 

Insurance providers report claims paid on their Schedule A letters, but not a separate item for Claims charged. I'm wondering if this amount should be entered on Sched., AIIIb under both (1) Claims paid and (4) Claims charged. Reason I wonder is that the SAR pulls the 'claims paid' number from the Claims charged entry.