Lou S.

I think you might have a disguised 10 year eligibility condition that would cause a failure.

I think you are making a mountain out of a mole hill - to me it is more like "we've decided to roll missing participants to the the benevolent* Company Big Plan" instead of sending them off to "uncaring* missing IRA institution". 6 of one half a dozen of the other in my eyes. *the asterik words added for effect.

I don't know if it is technically allowable but I also doubt that either the IRS or DOL would have a problem transferring missing participants to Company Big's plan where Company Big is clearly assuming some fiduciary liability for the accepted assets and you are transferring from one tax differed account to another which as I understand it was the whole concept behind the forced IRA cash outs.

Sorry, I didn't stop to see what forum this was in. My bad. And sorry 409A not my area of expertise so can't help with that.

Have you checked the Master Text of the document or just the Adoption Agreement. It is usually spelled out in the Master Text. It is also often listed in the Summary Plan Description. While not definitive you might want to check in there.

Yes Yes

You accrue the 401(k) contribution withheld on 12/30/14 but deposited on 1/2/15, why wouldn't you accrue the participant loan payment?

No. You can do that. Kind of an a-hole move and says a lot about the employer, but nothing illegal about it.

I'm confused. The other 401(k) plan has no relevance on the current 401(k) plan for ADP testing.

Home is where the heart is. If that's their primary residence, I think it would qualify but I have no specific additional cite to add other than the actual term "primary residence".

Prime + 2 should be 5.25% if I'm not mistaken. We typically use prime plus 1. If you take a survey of local banks for secured loan rates I'm pretty sure you can justify a lower rate, just keep documentation to support it.

We had a client who kept his PS plan going after retirement because ~90% of his investments were 3rd party arms length loans, usually as 2nd mortgages. It was cheaper for him to pay annual admin fee and 5500 filing than to roll them to an IRA and have non-traditional IRA assets subject to hefty trustee fees. He did very, very well with this investment strategy. But he was very savy in evaluating the risks. That said, we've also seen it blow up on some folks who have tried to do the same. It's not something I would generally recommend to most but as QDROphile correctly points out, nothing in the code that specifically prohibits it. Though the Plan's investment policy might.

Assuming the loan policy allows it and they can actually take a new loan under the loan limits of 72(p) (remember the deemed loan including accrued interest is still owed and counts against the limits) then yes they can take a new loan. The loan policy should spell out whether or not they also need to restart payments on the deemed loan. If it was me and I had say so I would draft the loan policy such that participants who have a deemed loan are not eligible to take a new loan until the deemed loan is either paid off or offset under a distributable event but hey that's just me.

The plan document would have to grant them service with the other employer for them to get eligibility and/or vesting service. If you are concerned however you could have a memo indicating that while we are recognizing service for seniority/vacation purposes this should not be construed as extending to other benefit plans of the company - or something like that.

Since a SEP is an IRA, I would look at the rules for removing excess contributions from an IRA. If you are on extension I believe you have until your extended due date to make the corrections and avoid the 6% excise tax. You may also be able to treat some or all of it as non-deductible contribution to the IRA creating a basis. Though if the contributions came from your S-corp there may be other problems beyond my expertise since I don't work much with SEPs or corporate taxation. The IRA custodian can't just "resind the 5498".

We've had plans that make refunds every year. As long as you process the refunds timely there are zero plan compliance issues with making refunds.

Just curious, do you know for sure because you talked to the client or strongly suspect they have not filed because they are generally flaky? Why would you contact the DOL if they are not your client?

I'm not sure I follow your question. Are they defaulting on a participant loan? What does the loan program say? How do you borrow "only after tax money"?

There is what is reasonable, and there is what is practical. Sometimes they are not the same. I would assume the partnership would determine this, preferable before the fact, but possibly after the fact. Any of your 3 scenarios might be used and each would be reasonable in my opinion. But I am not a CPA. That would be the first person to talk to in this situation if the partnership sell agreement doesn't cover it.

For what purpose? The partnership agreement should spell out how contributions are allocated. For certain IRS tests, the highest percentage owned at anytime during the plan year is used. You should probably talk to the CPA as to how they are allocating expenses for the pension contributions. This is just a guess but I would suspect that all partners (including the departed) are going to be responsible for their own contributions and that the contributions for non-partner employees are going be split equally between the remaining 8 partners, but there may be some agreement that the 2 departing partners will be paying some of the ee cost, though that's doubtful as collecting those contributions can sometime prove problematic in practice.

If you are a maybe plan, you aren't a safe harbor plan. Amendment should be no problem. I think you might lose the ability to change your mind and be a "yes" for 2015 depending on the amendment, but if you are sure you aren't going to use safe harbor shouldn't be an issue.

Maybe I'm wrong but I thought the procedure was if you filed timely but the DOL/IRS found it to be incomplete they they sent you a letter with 30 days to correct it. Has that changed?

As long as you have the "good" acknowledgement file, I agree with your position to simply file an amended return now. We never did this but I've heard in the "good old days" before e-filing this was a somewhat common strategy for filing plans that couldn't get their audit done by the extended filing deadline. I understand it doesn't work quite as well these days but some still do it to buy them an extra few weeks to get the audit done. Of so I've heard.

Why would use DFVCP? Why not just file an amended return? Has the DOL sent a letter about the first filing?

If you are putting it into the Plan as a profit sharing contribution it would not pass IRS testing if only owners received an allocation. It is possible to draft the plan to give different rates of contributions to different classifications of employees but it is likely that a "large" allocation to owners would very likely require at least a 5% of pay contribution to rank and file. The interplay of the various Internal Revenue Code sections discrimination test are generally too complex to give you a simple yes or no answer.