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Idioteque9004

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  1. So you believe it is technically allowed? I would assume CG rules apply too but I guess the argument is there is no CG because the "Parent company" doesn't exist anymore. Still...it just doesn't pass the smell test, imo.
  2. I need some clarification. Someone in my organization (that we normally see as the expert) is saying that the rules for successor plans only apply to the business/EIN. In other words, if a company dissolves and opens a new LLC under a different EIN, they are not at risk of violating the successor plan rules. I always thought that these rules also applied to ownership. Our director is saying that they don't. I thought the purpose of the successor plan rule was to prevent employers from cycling through retirement plans so they can't simply have a distributable event and then open another plan. I would think this applies to ownership as well, because what's to stop an owner from dissolving and creating new companies to terminate/start up a new plan? Do you have any feedback? Is this person at my company correct? I don't want to dismiss the possibility that I might be mistaken, but I could really use a source that specifically mentions that the owner is exempt from this rule as long as the other company closes and the new plan is with a new company and EIN. All I can find uses the word "employer," and that seems vague in this particular instance. Again whether I am right or they are right, a source would really be appreciated. Thank you!
  3. Oh 100%, of course that's the goal. Unfortunately, in many companies I've worked at Implementation doesn't always do the greatest job of setting the client up for success. And so as someone who is on the plan administration team, and handles the plan terminations for the company, I am at the mercy of hoping someone already explained before they get to me. More times than not I bet it's not explained because they don't want people to get cold feet because they feel like they're selling their soul once they sign that plan doc. Do I think that's right? Definitely not. But it's probably what happens. The point of this post was more so to get some more clarity on how vigilant the IRS is about enforcing this rule. Because let's be honest we all know there are certain things RKs and TPAs due that they know would not fly with the IRS/DOL but they do it anyway cuz they know it probably won't be caught. E.g. Attaching an Accountant's Opinion placeholder on the 5500 🙄
  4. Hi everyone, We are currently working on ways to prevent unnecessary churn with our clients and one of the things we were looking at was making clients aware of the IRS Plan Permanency Rule that essentially states a plan must be established with the intent to be permanent,and if it is terminated within a few years, besides any of the approved reasons by the IRS, then they are at risk of violating that rule which could potentially lead to retroactively being disqualified. My questions are: 1. Is this really something the IRS even checks? In my six years in the industry, which granted isn't a ton of time, this is something I previously never heard of before and I don't believe it's ever been communicated to any of my previous company's clients when they requested a termination. Are that many people just not aware of it? 2. One of the approved termination reasons is a change in ownership. Does simply selling your business fall under that category? 3. Lastly, is the 5310 form actually required or is that only if they essentially want the IRS's blessing that the termination reason is qualified? The goal is ultimately to make them aware of this rule in the hopes they might delay the termination of the plan, and although it might not save a ton of business, I think it could definitely deter clients from terminating for reasons like " I just don't want one anymore" , or "my wife and I are going to rollover to an IRA (not Simple) and the employees will figure something else out" Any feedback is much appreciated!
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