Company A is owned by

Joe 59.23%

Other Owners 40.77%

Company B is owned by

Company A 46.5%

Joe 31.34%

Other Owners 22.16%

The other owners all own 5 - 10% and are not related to Joe nor are they participants in the plan.

Are they controlled or just multiple employers under one document.

I know they do not fall under the parent subsidiary rule, since the "parent" company does not own 80% of company B. Not sure when testing for brother sister how you handle Company A's ownership in company B.

thanks

Long Monday.... and controlled groups get very confusing late in the day

Kind of a strange one here, or maybe not so strange. Two spouses, each with sole proprietorships, in a non-community property state. The businesses are such that they clearly meet all of the spousal noninvolvement requirements of 1.414©-4(b)(5)(ii) below, with the possible exception of the piece I have emphasized below. My question is, how is this determination really made? Yes, I know we can get a tax attorney's opinion, but any idea what parameters they might use? Anyone ever seen any additional guidance, or had a real situation like this? I mean, does the fact that the spouses talk and work together when making a decision constitute "management" in the organization? Seems like you potentially get screwed either way...seems like facts and circumstances to the utmost degree.

I'd love to hear any opinions. Thanks.


(5) Spouse—(i) General rule. Except as provided in paragraph (b)(5)(ii) of this section, an individual shall be considered to own an interest owned, directly or indirectly, by or for his or her spouse, other than a spouse who is legally separated from the individual under a decree of divorce, whether interlocutory or final, or a decree of separate maintenance.
(ii) Exception. An individual shall not be considered to own an interest in an organization owned, directly or indirectly, by or for his or her spouse on any day of a taxable year of such organization, provided that each of the following conditions are satisfied with respect to such taxable year:
(A) Such individual does not, at any time during such taxable year, own directly any interest in such organization;
(B) Such individual is not a member of the board of directors, a fiduciary, or an employee of such organization and does not participate in the management of such organization at any time during such taxable year;
© Not more than 50 percent of such organization's gross income for such taxable year was derived from royalties, rents, dividends, interest, and annuities; and
(D) Such interest in such organization is not, at any time during such taxable year, subject to conditions which substantially restrict or limit the spouse's right to dispose of such interest and which run in favor of the individual or the individual's children who have not attained the age of 21 years. The principles of §1.414©-3(d)(6)(i) shall apply in determining whether a condition is a condition described in the preceding sentence.
(iii) Definitions. For purposes of paragraph (b)(5)(ii)© of this section, the gross income of an organization shall be determined under section 61 and the regulations thereunder. The terms “interest”, “royalties”, “rents”, “dividends”, and “annuities” shall have the same meaning such terms are given for purposes of section 1244© and §1.1244©-1(e)(1).

What is the IRS position on contributions made after 2 1/2 months following plan year end in the case where a funding deficiency would occur if only 2 1/2 months of contributions were credited?

DOL doesn't like it, is that correct?

Even the MB instructions remain ambiguous on this issue:

Despite the new general prohibition on pre-tax payment or reimbursement of individual health insurance premiums it appears that corporate payment or reimbursement of 2% S corp shareholder premiums is still essentially pre-tax via the IRC 162(l) deduction taken on the shareholders individual return.

See IRS Notice 2008-1 which has not been rescinded to my knowledge.

Anybody disagree?

Has anyone successfully obtained an HPID as required in 45 C.F.R. § 162.512 for a self-insured multiemployer welfare plan? The process seems to involve registering a "company" with HHS. I'm not clear on how a multiemployer plan would do this. Potentially register the board of trustees as the "company"? I'd appreciate any thoughts.

-Greg

I had prepared and uploaded a 5500 that was due on 8/15/2014. It was all ready, with attachments, on 8/14/2014 and the only thing left was for me to "local sign" (file electronically) on behalf of the administrator. I was at work all of 8/15/2014, but, for some reason, totally forgot about local signing, which would have taken me about 1 minute. This morning I realized what happened and immediately local signed and see that it was accepted. Does anyone have any thoughts/experience on how I can avoid unwanted consequences? Should I call the DOL?

Thanks!

A participant in an ESOP was set to receive distributions over 5 years. Last year the sponsor failed to make the 4th year distriibution. Does the 4th and 5th year distributions have to be taken this year or can they make the 4th distribution this year and the fifth distribution next year? Thank you.

Non-spouse beneficiary inherits a Roth IRA. Are the gains taxable?

I'm sure this has already been addressed on the message boards somewhere, but I can't seem to find it. So please feel free to just post links of where I should look.

Typically if a 401(k) plan wants eligibility to require service of less than 12 months, I offer to set up the document for elapsed time and continuous service, since it tends to simplify administration.

A plan really wants to require a month of service, with a specific hours requirement for eligibility. of course the document always falls back on the IRS 1 YOS standard if the plan's eligibility requirements aren't met.

Lets say its paired with quarterly entry.

What (if any) is the maximum number of hours the plan can require in one month of service? 3 months of service?

i.e. 80 hours in the first month of employment? if that isn't met that they don't enter until they satisfy the standard 1 YOS?

Are there are regs somewhere that address this?

Can a non-profit sponsor both a 403b and a 401k plan at the same time? If so, what are the advantages to having two plans?

I bought a "multi-purpose" product called Ballistol [edited 8/18: was Balliston] Lube to make the squeak go away on my office door (circa 1920), and, in frustration one day after dealing with a sticky trackball that refused to move easily despite cleaning of the removable ball and the points where the ball contacted the case, I squirted a bit of Balliston on the trackball.

Now the thing spins like a globe.

Re-application is necessary from time to time.

My workstation smells a little bit like a mechanic's garage, but the keyboard/mouse manipulator is happier.

I have several clients who operate staffing firms and they offer short eligibility to entice workers who might have other employment options. One plan has an eligibility provision of three months of service (no hours required) and age 21 with entry on the first day of the month following attainment. We're getting beat up on the ADP and ACP tests and I want to apply Otherwise Excludable (a/k/a Early Participation) rules to test the "short service" partcipants separately. (We have no Otherwise Excludable HCEs.) If I'm allowed to apply a statutory requirement of one year and age 21, can I exclude people who have worked for the company for three years but never acheived 1,000 hours?

The intent of the Otherwise Excludable and Early Participation rules was to prevent employers who are generous with eligibility from being negatively impacted. I feel as though I should be allowed to exclude employees who work 20-100 hours per year but I cannot find a citation to support this anywhere.

Help?

A non-spouse inherits a Roth IRA. Are the earnings subject to federal income tax?

Defined benefit multiemployer plan. When contributions come in to the Plan, 70% of the contribution is credited to the participant, 30% is non-credited. The participant's total benefit amount is a percentage of only the credited portion.

Due to an honest mathematical error, some (not all) of the participants had more than 70% of the contributions go toward credited and therefore less than 30% put toward non-credited. This went on for about 3 years before it was discovered. Again, it was an honest mathematical error (don't worry about how it happened, I'm satisfied with the explanations I've received).

91 total participants were affected. The Plan has about 180 participants, but not all of the 91 participants were affected each year. That's 91 total over 3 years, not 91 each year. So, one year it may have been 15 affected, the next may have been 40, the next may have been 26 (hypothetical, just using as illustration).

Of those 91, only 6 have since retired. The other 84 are still active and are not drawing any benefit yet.

Per EPCRS, the Plan can self-correct insignificant operational failures. I would argue that this would fit into that (the Fund is about $90,000,000 and the total amount at issue here is about 0.1% of that). Specifically, EPCRS talks about correcting Overpayments.

Overpayment is defined as a "Qualification Failure due to a payment being made to a participant or beneficiary that exceeds the amount payable to the participant or beneficiary under the terms of the plan or that exceeds a limitation provided in the Code or regulations."

Here's my question for all my learned colleagues on the board: for the 84 people whose accounts have been overstated but have not yet retired, has there actually been an Overpayment? Or, does Overpayment only apply to ACTUAL payment (like to the 6 who have retired)?

Thanks for your responses.

Wanted to run this by people: Can an employer who normally pays 75% of an employee's premium offer to pay 100% as part of a hiring incentive for certain positions they want to fill? Lets just say they need one key employee (the CFO or COO or some C suite person) and this is one way to incentivize the candidate to take the position.

I submitted a question for an IRS Webnar on Plan Terminations on whether the IRS position was "exactly" 25% or "at least 25%" of the reversion being transferred to a DC.

I submitted a question for an IRS Webnar on Plan Terminations on whether the IRS position was "exactly" 25% or "at least 25%" of the reversion being transferred to a DC.

Participant terminated and elected to roll funds to an IRA Rollover - custodian sent the funds to the IRA.

During an internal audit of the plan, it was discovered an incorrect date was provided to the platform and the participant was paid 80% instead of 60%. The over payment is approx. $1,800.

If the employer sends a letter to the participant requesting he contact the IRA custodian and have the overpayment returned to the plan, is there a problem with "ccing" the IRA Custodian on the letter. The participant has not acknowledged the calls from the Plan Sponsor and he may just discard the letter. But by including the IRA custodian on the letter, maybe the IRA custodian will convince the participant to authorize the return of the overpayment.

If the employer does not get the funds back, they will make the Trust whole.

thoughts??

Good article:

http://www.gizmag.com/tech-maintenance-tasks/33176/

I plead ignorance in advance. I do not work on 457(b) plans but had this question thrown my way.

May a 457(b) plan condition its match on last day employment? The plan is silent.

If permitted, am I correct that it is too late to amend for this for the 2014 calendar year?

I also just found out that there is a 403(b) plan. I do not know if the match is made to the 457(b) or the 403(b), so an answer covering both situations would be helpful.

Thank you!