austin3515

Beware! Larry, I don;t mean any disrepsect, but your "arbirtray" bifurcation to me seems the likely target of the following Q&A. The one time I did this was for a union and a non-union plan, and of course there are a hundred reasons to have separate plan for union and non-union (ok just one big one called collective bargaining). I have also seen it done for different legal entities. Anything else and I start to get nervous about the implications of this Q&A. Now I know, I know, this is "just" a Q&A. But still being right will not make me feel any better if I end up in a protracted debate with the DOL. the question was raised at the 2000 annual ASPPA meeting, in the general Q&A session. The questions at this session were answered by Joe Canary, Scott Albert, Lou Campagna and Mabel Capolongo of the Department of Labor: Question 5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? Answer: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process

There is an outer limit, I forget what it is, but it's more than 2 weeks. And certainly more than 1 week, which is the case here. And anyway it tells you if entered a date that is too far out in the future, and no such warning appeared here. PS the interest rates were released 3/7/2018.

Sure you can. Clients certainly cannot fund the lost interest on the very day it is caclulated. I always go out at least a week if not more.

Unbelievable. I created a Lost interest calculator to mimic the DOL site, but that just has a lot more functionality. So I have built in a way to validate the new interest rates that I enter. Welll, long story short I could not validate this quarter. In the end I figured out that it was the DOL site that was wrong.... Take a look at the attached as proof. The trick is to run an interest calc from 1/1/2018 until April 15th, and then 1/1/18 through March 31st. Same result!!

ASG rules use 318 attribution for ownership, so the age 21/50%ownership stuff does not apply. But even still I don't see an Affilliated Service group since these are not service businesses and there is no suggestion of any affiliation anyway. If my father was a CPA and owned 100% of a CPA practice, and I too owned 100% of my own CPA practice (no overlap whatsoever in the businesses), that is not a controlled group or an affiliated service group. I think everyone would agree without hesitation that this is so. If you go back and read the OP there is absolutely no relevant distinction between my example and the OP. A shared employee is certainly not enough to change this outcome.

I think they would go overboard on their review of loan defaults for example. It should have been just a penalty for X# of loans, no documentation required. Why bother reviewing documentation for crying out loud?? As an alternative, add loans and RMD's to the list of self-correction items within certain parameters. People make mistakes and there should be non--armageddon solutions here when they do. Loans and RMDs seem to be the most common and least egregious offenses IF THEY ARE ISOLATED, or at least if they do not recur in the future. My suggestion of course addresses both the communities need for solutions and their need not to be underpaid for work they were needlessly required to perform. I assume the Self Correction model has born out to be effective and capable of being policed through the IRS audit process. Why not?? (I get it, there are tax consenquences here, I'm sure that is the difference, but still, either self correction is reliable or it is not).

All well and god until you spend 50,000 in legal fees prove that. Why would you ever commingle when setting up 2 plans so easy??

Here is a problem for you. If the one of the Companies goes bankrupt, how do you figure out whose balances go to satisfy the creditors? Wouldn;t the vulcher like debtors try and attach all of the assets in the plan if they are commingled? Sounds so so messy.

Nice! Thanks Larry! That;s exactly what I was looking for!

That all makes perfect sense and is basically the spirit of this sentence in my OP. But is there anything I can point to that speficially says Owners cannot possibly negotiate for their own retirement benefits and can therefore never be excludable? It seems to me that this obvious point must be addressed in some literature somewhere. I agree it is a logical conclusion, but it doesn't seem to be one that bears out in a plain language English reading of the document. Their employment is indeed covered by the collective bargaining agreement because of how the agreement defines covered employment. I'm being told this is not so unusual, so logic dictates this question should hav been answered somewhere in an authoritative way.

I'm thinking some of their comp must be covered by the union and some of it not. So management responsibilities, profitability bonuses, all not covered. Hourly rates for working on covered employment in the trade would be union and eligible for union benefits. Do people think I have that rigth?

This strains the imagination, but it is so. The only employees covered by the union are owners (albeit of a very small percent). The owners make hundreds of thousands of dollars each. They are covered by some union multi-employer plan getting benefits. Has anyone seen this before? I see nothing that suggests that I am prohibitted from maxing them out in this Plan. I assume I have to comply with the 415 limits taking into account both "my plan" and any DC plan maintained by the union. But let's say the union plan is defined benefit. I can give them all the 415 max in this plan and nothing to the employees. If it's true, then yeah for my clients. But this seems to fall into the category of too good to be true. Has anyone seen anything like this?? I went through the regs and found nothing in the definition of collectively bsargained employees that would be problematic. 1.410(b)-6(d)(2). So disaggregation appears to be mandatory.

Employee A is a participant in a hospitals 403b plan and contributes 24,500 to that plan. Employee A is also an employee of a foundation and they also sponsor a 403b plan, to which Employee A makes no contributions (because he already maxed out in the hospital. The foundation ALSO maintains a Profit Sharing Plan (401a) and contributes $54,000 on behalf of Employee A. There is no overlap on the Boards, so no controlled group. I know that any additions to the 403(b) Plans would be considered subject to one 415 limit because the ee is deemed to sponsor their own 403b arrangement. But what about that profit sharing plan? What makes me nervous about 415 is that 415 tends to pull in "all plans of the employer." Does the fact that the foundation sponsors a 403b plan make Employee A aggregate all of his contributions under all plans sponsored by the same employer (i.e., the two 403bs plus the 401a)? Am I over-complicating this?

Not for nothing, Corbel put it into their Basic Plan Document which makes me think the IRS made it a requirement for an opinion letter. Perhaps there is an LRM or whatever they are that says it is a condition of a favorable letter?

So now you understand my sense of humor :) Your question is "Where does it say that the integrated allocation has to be written into the Plan." That reg says precisely that it must be in writing. Precisely. How many trainings have we been to and been told that a plan must be qualified not only in FORM but operation?

Larry, in case you missed it, here it is again: From §1.401(a)(4)-2(b)(2)(ii) (ii) Permitted disparity. If a plan satisfies section 401(l) in form, differences in employees' allocations under the plan attributable to uniform disparities permitted under §1.401(l)-2 (including differences in disparities that are deemed uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to satisfy this paragraph (b)(2).

You know. Tom, that's not exactly a lot of E&O coverage these days :)

Part of it too I think is for $500 an hour you can buy a better E&O policy than I can!

I guess I just thought that perhaps that "benefit" (i.e., that their future vesting could never be decreased) had to be protected. But I'll let someone who charges $500 an hour figure that out!

I would never do the amendment described above on my own. There is an ERISA attorney we work with regularly on all of the abnormal stuff like this (there's not that much like this, of course). a) because we think he is great; b) we are not lawyers and so are not comfortable coloring outside the lines; c) we can have peace of mind knowing that if the tax cometh, we can provide him with another's information. I know he wouldn't do it if it wasn't possible. Now that I think about, presumably amending the basic plan document to pull out that paragraph in and of itself would be a cutback though wouldn't it.

It's still in the EOB as an acceptable interpretation (albeit one that does not line up with the IRS's position). Something about the fact that the "Conference report" which is the best interpretation of Congress's intent supports Option A. It's the 2017 version of the EOB. At any rate, Sal left the door open a smidge indicating only that "conventional wisdom" suggests Option B.

§1.401(a)(4)-2 Nondiscrimination in amount of employer contributions under a defined contribution plan. (ii) Permitted disparity. If a plan satisfies section 401(l) in form [Note: NOT operation], differences in employees' allocations under the plan attributable to uniform disparities permitted under §1.401(l)-2 (including differences in disparities that are deemed uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to satisfy this paragraph (b)(2). That oghta do it for you?

A) Integration level (i) In general The term “integration level” means the amount of compensation specified under the plan (by dollar amount or formula) at or below which the rate at which contributions or benefits are provided (expressed as a percentage) is less than such rate above such amount.

ESOP, that scenario is much more complicated than what we have to deal with fortunately. I suppose I COULD amend our Plan for this client to remove that paragraph and do it anyway, and yes of course lose reliance. But how comfortable is everyone that the IRS won't come back and question this. ESPECIALLY since I can't even submit for a DL anymore?

My client cares nothing for cleaner. They adamantly want as much money on vesting as possible. There is a new regime in town and they are very upset that the old regime gave away the store so to speak. I think there are cash flow issues, and some decent turnover.