austin3515

My understanding of how these arrangements usually work is that they are really just outsourcing the payroll/benefits function. Again, the ability to hire and fire remains with the doctor, and I have always been told that is a pretty darn good rule to apply when determining common law status. In the situaiton I am desparately trying to communicate, such is the case. The Doctor: Sets the pay rate Hires & Fires Tells you when to come in, what time you can go home, and how to do your job. I don't what other criteria anyone can point to that would suggest that these might not be the common law employees of the medical practice. To me, it is as obvious as 2+2 = 4. And this is my understanding of how a PEO arrangement usually works, which is why the IRS came out several years ago mandating the multiple employer approach.

The medical practice??? Am I the only person who thinks you can't pay someone to take over your role as the Employer for ERISA purposes? Hey, why not put just your employees in ADP total source, and that way the Doc can have his own plan, where he can max out and not give his employees a dime! That will pay for ADP's fees!! What a great design! But of course we all know if it sounds too good to be true it usually is...

I suppose I could more appropriately label it as a PEO. But they are definitely on the payroll tax returns of a 3rd party, which of course is an important distinction from a payroll provider.

Except that the leased employee rules do not apply to COMMON LAW EMPLOYEES. Not really yelling, I'm actually laughing out loud because I sound like a broken record

Small medical practice A has no patience, desire, time, etc. to worry about paryoll, employee benefits, etc. Plus, they are a small company so can't get good rates. Solution: Have your employees transfer over to a leasing company, like ADP total source. That doesn't mean that you have no employees for really any purpose I can think of, and certainly not ERISA. The Dr. can hire, fire at will. So they are the common law employees of the person they work for... Please someone else chime in here and make everyone agree with me!!!

It does involve deferrals.

"There doesn't appear to be any reason you can't terminate the plan and transfer assets to the leasing company's plan." So maybe wer're saying the same thing. I agree that if we do the nonelective transfers to the leasing plan, we can terminate the old plan. But people can't roll to IRA's or cash out, etc. - do you agree with that?

Because the employees are still the common law employees of the same company, so there is no "severance of employment."

1) All employees switch from payroll of the employer to the payroll of the leasing company. 2) They now participate in that employer's multiple employer plan 3) No break-in-service, so we can't pay people out 4) Can't terminate because of the existence of a replacement plan. So what do we do? 1) Merger to multiple employer plan (seems unlikely)? 2) Nonelective transfers to new plan and then plan termination of old plan. Have never really used nonelective transfers, but I'm pretty sure they would apply hear

I would say the LP is out (unless it's traded on an exchange, which I think some are?). I think personally, I would conclude that the life insurance policy qualifies. The FMV should be the Cash Surrender Value. Doesn't seem to be too much of a stretch to me...

Thanks Bird! Anything you can provide in the way support would be greatly appreciated. Was this part of a Q&A or something? Or is my interpretation of 1402(a)(13) on the money?

I THOUGHT it was pretty clear that the earned income for a limited partner was calculated solely by taking into account their Guaranteed Payments, based on 1402(a)(13). But the question I am now struggling with is that in spite of this exception, do I still need to reduce their comp by their own employer contribution (eg, ps contributions allocable to their own account)? 1402(a)(13) says they can disregard the distributive share of the income of the partnership, but their own contriubtions would not have been deducted on their anyway, so I'm not sure they fit into the exclusion?

just filing a DFVC application for a Form 5500 prepared by, yup a CPA!. Thankfully, the client did not file this ridiculous 2008 Form 5500 (plan has 8 participants): -They indicated that the Plan's funding arrangement was the general assets of the employer -They had the following Pension Feature Codes - 2K. That's it. Not even 2J. -Here's the kicker - they filed a Schedule H, and for some reason did not get an accountant's opinion!! I'm prepared to testify before Congress if they ask me!!

Discretionary authority fits the job description of every dc tech at a TPA. I mean I suppose when it really comes down to it, none of us use discretion when preparing these things, since theoretically, there is really only one right answer. It's either right, or it is wrong, without much gray area. There should only be one correct answer for total assets, total active participants, etc. I'm hard pressed to come up with a single item of discretion... Maybe sheudle C presentation?? The whole thing is insane. I couldn't believe it when I read it, and that was before I read that we would all need training in general tax principles. This is almost as ridiculous as top-heavy rules...

Right, I remember now that the original EPCRS only had that option (the huge QNEC for everyone), and we all rejoiced when they added the one to one...

Example from EPCRS (SECTION 2. CORRECTION METHODS AND EXAMPLES) On June 30, 2007, Employer A uses the one-to-one correction method to correct the failure to satisfy the ADP test for 2005. Accordingly, Employer A calculates the dollar amount of the excess contributions for the two highly compensated employees in the manner described in § 401(k)(8)(B). The amount of the excess contribution for Employee P is $4,000 (4% of $100,000) and the amount of the excess contribution for Employee Q is $2,375 (2% of $118,750), or a total of $6,375. In accordance with § 401(k)(8)©, $6,375, the excess contribution amount, is assigned $3,437.50 to Employee P and $2,937.50 to Employee Q. It is determined that the earnings on the assigned amounts through June 30, 2007 are $687 and $587 for Employees P and Q, respectively. The assigned amounts and the earnings are distributed to Employees P and Q. Therefore, Employee P receives $4,124.50 ($3,437.50 + $687) and Employee Q receives $3,524.50 ($2,937.50 + $587). In addition, on the same date, Employer A makes a corrective contribution to the § 401(k) plan equal to $7,649 (the sum of the $4,124.50 distributed to Employee P and the $3,524.50 distributed to Employee Q). The corrective contribution is allocated to the account balances of eligible nonhighly compensated employees for 2005, pro rata based on their compensation for 2005 (subject to § 415 for 2005).

Been a while, but I though the 1 to 1 was you do a QNEC in the same amount as the ADP refunds? I didn't think you were able to avoid the refunds? But it's definitely been a long time since I've had to look at this...

Does anyone have a sample notice they would share? I can't believe I can't find one. We are an open architecture shop with a few audited plans. The recordkeeper we're using is getting some revenue sharing so I'm trying to disclose this to the clients in compliance with EIC rules. Any help appreciated... Thanks,

http://www.401kplanning.org/top-401k-plann...on-a-401k-loan/ This article is interesting and referneces a study by the Federal Reserve (there's a link in this article)... I don't pretend to follow the logic, but it seems to be that while the interest IS double taxed, there are tax advantages that neutralize this, as long as the "discount rate and the loan interest are assumed to be the same" (as in masteff's example). I presume masteff's example is built on the same logic the fed was using, and is simply presented in an easier to understand format. So although regrettably, I would not be able to explain this phenomenon to a client, it appears that there is one less downside to borrowing from a plan. See section 3.2 of fed's write-up. I believe them, I'm just not sure I follow why the making after-tax payments over 5 years offsets the double taxation of the interest, but they're the fed, so I'll believe them! http://www.federalreserve.gov/pubs/feds/20...2/200842pap.pdf

Wow... So I guess what I must have missed in all of those financial articles is that the double taxation is only an issue if the alternative is NOT taking a loan at all. Would you agree that if you are deciding whether or not to take a loan in the first place, the double taxation still applies? Let's say for example option 1 is liquidating a personal savings account, and option 2 is the participant loan. Yet again, something I thought was clean cut is not

Tom seems to have slipped something very interesting in here that I wanted to call more attention to. So if the loan is taken from the Roth account, then the double taxation on the interest (which in my opinion is irrefutable) is completely avoided if the money is taken from the Roth account (assuming it is later withdrawn as a qualifying distribution). That's a pretty important aspect for the people who take out $50,000 loans for 5 years (which is the only time I even bring it up).

Controversial, but nothing to say it is wrong. ERISA Outline Book goes over this, and some people definitely say it can be done.

"One way to look at it is that the owner is loaning herself the money until she "wants" to deposit it. If given the option, many employees would wish to "defer" from each paycheck, but then pay the money into the plan at their leisure -- might be difficult explaining that rationale to the client but that's certainly how I look at it. " What a great point... It's essentially a participant loan program just for the owner, without ratable repayments, not available on a non-discrimininatory basis, etc. The good advice would be to do her 401k quarterly, after saving up for a few months. I think the DOL's late deposit contributions (while clearly violated) are the least of the concerns based on the quote above.

I thought of that briefly, but ruled it out due to public disclosure... We were speculating that perhaps the IRS would just file this giant pile of 5500's away and not do anything with it anyway...

Any thoughts on doing it all on 2009 forms? To be sure the hardest part of this project will be finding the applicable forms. We actually have statements going back to 2000.