PensionPro

I am curious if the IRS itself has made this argument at some point.

Or does the plan document provide that benefits are unassignable?

We have a 403(b) plan that excludes commissions and bonuses for deferral purposes. Is there any nondiscrimination testing involved or is this okay? Thanks.

line 4

Agreed the so-called solo 401k market is a compliance disaster. We run into several cases where no one is paying attention to the reporting requirements when assets cross the 250k mark, owners' children are hired, common law employees are hired, controlled group rules, aggregation of 402(g) limit, plan termination reporting requirements, 415(c) violations, successor plan rules, and on and on ... save money on annual administration fees and use that to pay for costly corrections!

there would be no ASG unless at least one of them is a service org. It does not seem to me that either of the companies fits that description.

that is correct. the controlled group question relates to document provisions about employees of which entities are eligible to participate and do controlled group members have to adopt or participate etc.

are they a controlled group?

You are correct. If the businesses are treated as separate property under state law by virtue of a valid agreement and the non-involvement exception applies, the two entities can be treated as unrelated but check the details.

http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irlf22d/1/doc

We advise clients that the minimum funding deadline is not extended if it falls on weekend or holiday but if client already deposited contribution on Sept 17 there are a couple of arguments: PLR 8139009, but it is just a PLR "It can be argued that, since failure to satisfy the minimum funding deadline results in a funding deficiency, which triggers the excise tax under IRC sec. 4971, that IRC sec. 7503 is applicable." - EOB.

The IRS has been known to use the terms "floor offset" and "offset" plans interchangeably.

Is his comp considered US source income?

If you make matching contributions to another plan then your deferral-only 403(b) plan may be subject to ERISA. See DOL Advisory Opinion 2012-02A.

each child is deemed to own 100% of the corp

It seems to me the CPA is treating them as a single trade or business using the same EIN so you would net the self employment income. If this causes nondeductible contributions see the discussion referenced earlier in post 2. What other issues are you concerned about?

Does this help?

We use ASC and we spoke to ASC support and there is no easy way to run the calcs on ASC. Short story long ... plan is co-sponsored by a corporation and a partnership, partners (about 6 of them) get W-2 from corp and K-1 from partnership. The partnership will deduct contribution made to employees of the partnership not the corporation. To make matters more interesting, they also have a safe harbor matching contribution, and they have forfeitures they want to use to reduce contribution. While we will adjust our client invoice to reflect the additional work, it is not something ASC can handle easily. I figured it would be easier to run it on Excel if I can work out the formula first. I know the formula for a percentage of comp contribution. Contribution percent / 1 + contribution percent. Trying to figure similar formula for integrated allocation so I can lessen the time spent on trial and error. Thanks Mr. Bagwell, appreciate your help. We are actually looking for the 2-tier allocation but a spreadsheet that takes into account partnership compensation - the circular calculation so split income between contribution and compensation.

Yes, correct, that is exactly what I am looking for. The online app is not the solution to my dilemma. I am not trying to determine integration levels, rather calculating partner income based on set integration levels. Thanks!

Long story short ... We have run across a complex situation where the valuation software is unable to calculate the integrated PS allocation for self-employed individuals and we have to figure this out on a spreadsheet. Can anyone provide insight on the formula to use for splitting income between compensation and integrated allocation where some partners plan compensation will be over the TWB and others below. This is probably a long shot but thought I would give this a shot. Thanks for any help!

From § 1.414(v)-1(b)

Yes. From the IRS web site:

https://www.irs.gov/retirement-plans/self-employed-individuals-calculating-your-own-retirement-plan-contribution-and-deduction

yes withholding applies to account balance including o/s loan

No