Lou S.

If the Husband and Wife are the only employees, then you will be fine. If the husband's plan covers any employees you are going to have a BRF problem if she's allowed to invest in real estate and the rank and file employees are not. As to why she's adopted on to his plan, the answer is they likely have minor children making them a controlled group --- until that changes next year with SECURE 2.0 provision and they are no longer CG due to minor child. But spinning her off into a new 401(k) Plan for her company would seem to be the way to go whether it is this year or next year. Just make sure they know the pitfalls if an employee becomes eligible before 1/1/2024.

Why not just spin off in 2024 when they are no longer a controlled group instead of creating potential compliance problems for both plans by doing it in 2023?

I'm not a CPA or Attorney either so good to get one or both involved. That said my understanding is the for Federal purposes owners can hire their kids provided it's not in a "dangerous" position like mining, manufacturing, etc. State laws vary and might be more restrictive so probably best that the owner run it by their employment lawyer. And compensation needs to be "reasonable for services provided" which is a matter for the CPA. But if the owners kid's are reported as employees on the census, I don't think it's the TPA job to make a determination whether or not they should be there.

Tell him to find an IRA to take the note or whatever it is for the 2 remaining payments and roll it to that IRA. He may need an IRA custodian that holds non-traditional assets, not your problem. Tell him to provide an independent valuation for the the value of what was rolled to the IRA. Report that value on 1099-R. File final 5000 series return. Direct him to ERISA counsel.

I don't think it does if X is a corporation. From the PBGC site - Substantial owners plans A private-sector qualified defined benefit plan is exempt from PBGC coverage if it is established and maintained exclusively for substantial owners of the plan sponsor (i.e., if all participants are substantial owners). A participant is a substantial owner if, at any time during the last 60 months, the participant: Owns the entire interest in an unincorporated trade or business, or In the case of a partnership, is a partner who owns, directly or indirectly, more than ten percent of either the capital interest or the profits interest in such partnership, or In the case of a corporation, owns directly or indirectly more than ten percent in value of either the voting stock of that corporation or all the stock of that corporation. The constructive ownership rules, including spousal attribution rules, of IRC § 414(c) and § 1563(e) apply only in the case of a corporation.

I think before electronic filing, the SSA was not that great about removing folks reported as D. But that's just my guess.

I wouldn't think so. The Veterinary PLLC is a professional service corp so it wouldn't be covered and the Controlled group Corp X only employs owners and their spouses. But as always, the best way to find out is ask the PBGC for a coverage determination.

401(a)(17) is based on BOY so 2022 limit. 402(g) an catch-up (if applicable) are both based on calendar year so if all pay for the fiscal year is paid in June of 2023 then only the 2023 limit and catch-up come into play. 415 is based on EOY so 2023 limit.

They are co-employers. The PEO just picks up some functions and legal responsibilities as the employer of record. Unless they do something with the DB Plan, the newly hired employee will enter the Plan under whatever eligibility the DB plan has in the document. Hopefully it has some service requirement that is not immediate so you can make some recommendations before they become eligible. Likely they will have to cover the employee and all that entails or consider terminating the Plan before the employee becomes eligible.

Section 603, Elective deferrals generally limited to regular contribution limit. Under current law, catch-up contributions to a qualified retirement plan can be made on a pre-tax or Roth basis (if permitted by the plan sponsor). Section 603 provides all catch-up contributions to qualified retirement plans are subject to Roth tax treatment, effective for taxable years beginning after December 31, 2023. An exception is provided for employees with compensation of $145,000 or less (indexed).

You can match 100% of deferrals as long as you don't exceed 415 there is nothing in the code or document rules that would prohibit it from a compliance stand point. It's the deduction limit that might get you into trouble but that 25% of all compensation so if there are a lot of employees eligible not deferring much it might work. Oh and ACP testing is likely to be a big problem as well as you're likely to have trouble passing ACP with the owner getting a ~40% match (I'm assuming this guy is the owner). So unless you have a lot of HCEs deferring 0%your ACP test is likely to fail miserably. You are probably going to have trouble with ADP testing as well unless this a safe harbor plan in which case only ACP is going to be an issue. Now if he's the only ee, you are right with the 25% er contribution + 401(k) as his effective maximum.

A good reply might be "That's an excellent question. Here is the name and number of a qualified ERISA attorney who might be able to help you answer it."

I have not researched this in quite some time and have thankfully not had to deal with it. My understanding would be the 10% penalty for failure to meet minimum funding does apply and at this point would likely have penalties and interest for late filing of Form 5330. But with respect to the 100% penalty, I though that was imposed by the IRS ONLY if the funding deficiency wasn't corrected by the time they contacted you. If you are making up the 2021 funding deficiency and the 2022 MRC that should all be 100% deductible as required contribution unless something odd is going on like that is more than a Self-employed individual's earned income. I think the instructions for Schedule SB Q19 tell you how to discount the contributions; your unpaid minimum from the prior year goes into your reconciliation in Q28.

Q1 - Yes. Both have adopted so X & Y should be aggregated. Q2 - Since it's a controlled group I'm not sure it matters but that's a question for the CPA as to how they want to fund and deduct. Not always but typically I'll see the EE cost attributed to the EEs of X on X Sch C and Y on Y with the owner on the 1040. But in a CG (as opposed to ASG) I'm pretty sure you can split the deduction anyway you want. Q3 - I believe that is correct.

I'd be happy to be wrong, but it does seem to be out of the spirit and intent of the law. But who knows, Congress acts in mysterious ways sometimes.

Push (or have the client push) for the auditor to complete the IQPA ASAP even if they have to attach some statement about how the on going IRS may require an amended return and IQPA at a later date pending result of the audit. I don't know but missing the 45 day window sounds expensive with potential IRS/DOL penalties.

If you weren't going to have a IPQA report completed, you probably should not have filed the return and simply filed under DFVCP but I think that ship sailed when you filed without audit. But the 2022 return isn't even due yet, why would it be filed now without an audit attached? As for getting the IRS to close an audit in 45 days and send a closing letter, good luck. My last small plan audit opened July last year and despite the auditor verbally telling me he was closing the case in March, I still don't have the actual closing letter, they are kind of short staffed from what he told me.

The mere fact that the plan has a PS provision will not trigger losing the TH exemption. There has to be an actual allocation of contributions or forfeitures to lose the exemption.

I'm pretty sure the Plan must cover at least 1 NHCE to be eligible for the credit.

I'm confused how the IRS Audit is holding up the IQPA and how the two are related. Usually plans under audit are older years that should already have a IQPA. Are the IQPA auditors not willing to certify the IQPA while the Plan is under IRS audit and this is for a Plan Year subsequent to the IRS audit.

It's been a while since I've seen this one but we used to get it occasionally and often enough to added it to a form letter as one of the check the box entries. I don't recall ever getting any push back from the accepting institution. q The distribution due the participant named above is from a Plan intended to qualify under Internal Revenue Code §401(a).

Notice of Intent to Terminate must be distributed to participants at least 60 and not more than 90 days prior to termination in DB plans covered by the PBGC. Rocknrolls2 covers the 204 h notice requirement of pension plans, generally DB, Cash balance, Money Purchase and Target Benefit. As he notes, section 204(h) does not apply to profit sharing plans. There may be a best practice to notify participants in advance of the termination of a profit sharing plan, but I don't think you are going to find an IRS citation to that effect.

Good question. I've never really thought about having different hours requirements for a year of accrual for different classes of employees but I'm pretty sure our pre-approved document only allows once such definition.

Review the incidental benefit rules?

Excess Deferral = 402(g) refund. Excess Contribution = ADP refund Excess Aggregate Contribution = ACP refund. With an excess deferral the amount over the 402(g) limit is taxable in the year deferred but the gain/loss is taxable in the year received. With an excess contribution or excess aggregate contribution both the refund and the gain/(loss) are taxable in the year received.