Companies A & B are part of a control group. They have been operating their individual 401(k) plans separately for years and have never done any combined testing, etc.

Company A passes all of its tests regularly. Company B's HCE's are getting refunds and failing the ADP test. Both A & B are passing the minimum coverage test.

1) Are both A& B required to perform combined testing or can they continue to operate as they have been, completely separate with different record keepers, etc...

2) If both A&B are required to perform combined testing, and they pass the tests, can they then operate and test as separate individual plans as they were? If so, which tests must they pass in order to do so?

3) Where do I find this information in the regs?

I have a calendar year plan that terminated as of 12/31/2013. We will be filing the 2013 Form 5500 in the near future. The plan will be distributing all assets in February. So the filing deadline is 09/30/2014 without extensions. Has anyone heard if we cannot use the 2013 Form 5500 with dates 01/01/2014 - 02/28/2014. We've done this in prior years (used the proir year form for the current short plan year) when necessary. Thanks...

Have a one man 401k Profit sharing Plan (cross-tested) and the participant's compensation is say $51,000. The owner did not make any 401k deferrals in 2013, and wants to make the full 415 employer contribution of $51,000 for 2013. Obviously, this $51,000 contribution is greater than the 25% deduction limit of $12,750. Other than only being able to deduct only the first $12,750, is there any IRS penalty on the non-deductible portion of the employer contribution, the $38,250. Also, is there any special IRS tax form reporting of the non-deductible employer contribution, such as a Form 5530?

Am hoping someone may have some prior experience with this or may be able to recommend guidance on point.

Employer is a tax-exempt charitable entity that sponsors 457 plans. The entity is in the process of establishing a new, wholly-owned LLC that is neither charitable or tax-exempt and is intended to function as a for-profit entity. (Eventually, a significant percentage of the the LLC will be owned by others (including those providing services to the LLC) but the charity will continue to own / control 80%+ of the LLC foreseeable future.)

Given its status / classification, it would seem that the LLC is not eligible to generally establish a 457 plan on its own nor participate in the existing 457 plans of the charitable parent, etc. The LLC could presumably establish its own deferred compensation plan subject to 409A but not 457 and may consider doing that in the future. For now, however, it is taking time to get the LLC off the ground and its own infrastructure in place, etc. During this start-up / transition period, the charity intends to "lease" its existing employees (some of whom participate in the 457 plans) to the LLC in order to have them focus solely on LLC-related activities. The Plan is for a number of these individuals to eventually be terminated by the charity and hired directly by the LLC and become LLC employees but that is likely a few months away.

Question is whether the individuals can continue to participate in the 457 plans (and 403(b) too I think) during this interim period where they technically remain employees of the charity but are being formally leased to the LLC and focusing just on LLC work. As a technical matter, the charity will remain their employer for general payroll, tax, reporting purposes and be in control of their work but their services will all essentially be for the benefit of this new for-profit subsidiary.

Welcome any thoughts or advice anyone may have on this issue.

Am hoping someone may have some prior experience with this or may be able to recommend guidance on point.

Employer is a tax-exempt charitable entity that sponsors 457 plans. The entity is in the process of establishing a new, wholly-owned LLC that is neither charitable or tax-exempt and is intended to function as a for-profit entity. (Eventually, a significant percentage of the the LLC will be owned by others (including those providing services to the LLC) but the charity will continue to own / control 80%+ of the LLC foreseeable future.)

Given its status / classification, it would seem that the LLC is not eligible to generally establish a 457 plan on its own nor participate in the existing 457 plans of the charitable parent, etc. The LLC could presumably establish its own deferred compensation plan subject to 409A but not 457 and may consider doing that in the future. For now, however, it is taking time to get the LLC off the ground and its own infrastructure in place, etc. During this start-up / transition period, the charity intends to "lease" its existing employees (some of whom participate in the 457 plans) to the LLC in order to have them focus solely on LLC-related activities. The Plan is for a number of these individuals to eventually be terminated by the charity and hired directly by the LLC and become LLC employees but that is likely a few months away.

Question is whether the individuals can continue to participate in the 457 plans (and 403(b) too I think) during this interim period where they technically remain employees of the charity but are being formally leased to the LLC and focusing just on LLC work. As a technical matter, the charity will remain their employer for general payroll, tax, reporting purposes and be in control of their work but their services will all essentially be for the benefit of this new for-profit subsidiary.

Welcome any thoughts or advice anyone may have on this issue.

employer gives a stock grant subject to a vesting schedule. my understanding is in order to exclude this item from 415 compensation you would have to use the comp ratio test. there is an exception for income subject to 83(b) election. can anyone tell me more about this?

CPA firm bought a building with plan assets. They now need to replenish the cash in the plan and want to borrow money from a local bank and use the building as collateral. They pushed back when I told the Banker it was not possible.

Honestly I'm too lazy to look up the citations today so I am hoping someone can point me to a cite to provide them.

Thanks ahead of time for your help.

We just became tpa for Co. A's plan. Co. A is an S Corp.

Person A is a 3% owner on 01/01/2013. On 09/01/2013 Person A becomes a 6% owner. The 2013 K-1 will show pro-rated ownership of 4.25% (or something right about there.)

Prior tpa forwarded us the 2013 ADP/ACP test which has Person A as an NHCE. I spoke with plan sponsor about it. They are hoping to avoid refunds and want to assert that Person A is an NHCE for 2013 because the pro-rated ownership on the K-1 is less than 5%. Does anyone see any validiity to that assertion?

I don't see it. It is my understanding that if an employee is a more than 5% owner at any point during the current plan that employee is considered an hce. I thought it would be worth a stab in the dark though to try to find a valid argument supporting the plan sponsor's "hoped for" result.

Thanks in advance for any guidance.

A 100% business owner of a PC (must be a licensed professional to be the owner) lives and does business in a community property state.

The owner has children from a prior marriage and they are employed by the business. These kids are HCEs due to attribution.

The owner's spouse also has children from a prior marriage and they are also employed by the business. These kids were never adopted by the business owner. Due to community property rules of the state, this spouse is considered as owning 50% of anything the business owner owns. Due to that, are these kids, the step-kids of the business owner, HCEs? Or is that double attribution?

It is my understanding that a 410(d) election goes to the characterization of the plan, not the sponsor. If so - or perhaps regardless - may an employer sponsor one or more non-electing church plans and, at the same time, sponsor ERISA-governed plans?

A plan document interim amendment was signed 12/31/2012. As part of this good-faith interim amendment, the plan was amended effective for plan years beginning in 2012 to incorporate MAP-21 provisions and rates. As part of the amendment, a plan sponsor could elect to delay MAP-21 to plan years beginning in 2013 or to apply the MAP-21 provisions just for the AFTAP.

Question: must there be a written election to the plan actuary to use the MAP-21 rates? Or does the signed amendment incorporating those rates suffice?

Thanks.

Under the Roth in-plan conversion guidelines set forth in Notice 2013-74 (all money types), must the available converstion assets br 100% vested? If seems to make sense, but I can't find anything specific. If the answer is no, can the plan amendment require 100% vesting? Thanks

I am working on a plan that terminated 12/31/2012. There are four participants - a husband and wife (owners) and two employees. The final two distributions were in September 2013, when each of the two owners took a reduced benefit (since the assets weren't suffcient). At the end of September the account balance was $0.52. In October, there were $64 in dividends that were promptly transferred pro-rata, to the two owners. At the end of October, the account balance was $0.30. In early November, the remaining 30 cents was transferred out and the account was closed. For the 5500-SF. Would the plan year end be 9/30/2013 or 11/30/2013?

Any help would be appreciated!

I am working on a plan that terminated 12/31/2012. There are four participants - a husband and wife (owners) and two employees. The final two distributions were in September 2013, when each of the two owners took a reduced benefit (since the assets weren't suffcient). At the end of September the account balance was $0.52. In October, there were $64 in dividends that were promptly transferred pro-rata, to the two owners. At the end of October, the account balance was $0.30. In early November, the remaining 30 cents was transferred out and the account was closed. For the 5500-SF. Would the plan year end be 9/30/2013 or 11/30/2013?

Any help would be appreciated!

Is there any rule/regulation that a new plan (small 401-k/Profit Sharing) has to start on the 1st of the month (january1, July 1) or could it be any other day of the month?

Within the past 2 months, I have gotten referrals from a couple of accountants regarding old "keogh" or small one person plans that were set up with Citibank many years ago. Citibank is trustee and the plan uses the Citibank prototype. Now, all of a sudden, Citibank is waking up and saying that they don't have a signed copy of the EGTRRA restatement and they have frozen these accounts until the matter is corrected through VCP.

In at least two of these referrals, the client has nothing since the original establishment back in the 80s. Requests to Citibank to look for interim documents is not yielding any results.

The standard VCP submission using Schedule 2 would require separate restatements and interim amendments, as well as the latest prior plan document. I probably couldn't even find some of these old document templates (such as TEFRA/DEFRA/REA). Will the IRS consider an application under these circumstances that just includes the EGTRRA document?

Considering that Citibank probably has some culpability for not monitoring the continuing qualification of the plans for which they are trustee, it is pretty heavy handed to place full responsibility on the shoulders of these individuals who assumed that Citibank was taking care of this and who do not have the resources that Citibank has.

Thanks for any input.

My question has to do with the the fact that the 5304 states..."Not for Use With a Designated Financial Institution" Ahhh.. what is a "Financial Institution" ??

Is the Financial Institution a specific family of funds like American or Vanguard? Or is the Financial Institution the firm that the financial advisor works for?

I take it to be the financial advisor's firm... but I want to be spot on correct!! How do others interpret that statement?

Im leaning toward telling this FA to use 5305-SIMPLE

Thanks

What are members reactions to this T.C. memo (Bobrow v Commissioner T.C. Memo. 2014-21) applying the rollover waiting period to all IRAs that a taxpayer maintains?

Hey all,

Long time lurker and first time poster on the forum! I am hoping for some help with the following question about controlled group status. I believe I know the answer but I want to double check before submission to legal counsel for confirmation.

Do the following companies pass the controlled group testing requirements?

MW

RW*

WCDC

Husband

32.50%

50.00%

20.00%

Wife

16.00%

0.00%

20.00%

Sister

32.50%

50.00%

20.00%

Other1

10.00%

0.00%

20.00%

Other2

0.00%

0.00%

20.00%

*RW wholly owns another company - TR

My conclusions are the following:

1.) MW and RW are a controlled group

2.) MW and WCDC are a controlled group

3.) RW and WCDC are not a controlled group

4.) TR is part of the MW and RW controlled group

Client would like all companies covered under a single plan.

What are your thoughts about the controlled group status and the plan issues with attemting to cover the companies under a single plan?

Thanks!!!

One of the plan's HCEs received a much larger match than he should have. The plan year is now over.

(1) By definition, is this excess considered an "excess contribution"? I do not think so, as that term applies to employee 401(k) contributions that need to be returned due to a failed 401k test. Is their an official term that describes this type of contribution violation?

(2) Does the match simply come out of that HCE's account and is used for future employer contributions?

(3) Does the excess amount still count in the HCEs ACP test, as well as in the 401a4 testing (cross-tested PS allocation in the plan)?

Thanks