Bill Presson

Lou is correct. I do think the owner has some flexibility in which company he's recognizing the compensation. For example, he could just assume it's pro rata compared the the actual comp. Or he could use all the the comp from 1, all the comp from 2 and just the remainder needed from 3. As long as it's all reasonable.

Belgarath is correct (of course), but the client needs to remember that every CPA firm starting an audit for 2023 is still going to need to get comfortable with their beginning balances, etc. They won't do an official audit, but they will spend a lot of time reviewing the 2022 (and likely prior) year's data.

This is from our basic plan document: If a Participant has both a Pre-Tax Deferral Account and a Roth Deferral Account, the Participant may designate the extent to which the corrective distribution of Salary Deferrals is taken from the Pre-Tax Deferral Account or from the Roth Deferral Account

This is very common and very frustrating. Because we can almost always make things work if given the chance ahead of time. With that said, what kind of sale was it (asset/stock)? Was the plan terminated before the sale?

Agree with Lou. Just had a very similar issue and we did extensive research to try and get that stopped a year early. No luck.

Remember that the name of the plan can essentially be anything they want. We had a client that just wanted "Retirement Plan" so that's what we used in the documents and on the TIN application. Everything has worked fine. Also had another large professional group (doctors) where the firm name was consistent, but turnover in the ownership group. They made an application to the state board of financial institutions and received approval for the entity to be the trustee on the plan. Rare, but worked out well. They could also just choose to go the corporate trustee route. The cost is likely much less than fees for plan/trust amendments and their time dealing with it.

While it's been wrong for awhile, has it really impacted anything that would require this? Have any distributions been wrong?

Whomever is giving you this "thinking" doesn't need to be advising on the technical side of retirement plans.

In addtion to what MoJo wrote (which I cannot improve on), I have made connections here with which I've been able to continue a professional relationship outside the board itself.

I think so according to this: 26 CFR 1.415(c) 1(b)(6)(i)(C) Date of employee contributions. For purposes of this paragraph (b), employee contributions, whether voluntary or mandatory, are not treated as credited to a participant's account for a particular limitation year unless the contributions are actually made to the plan no later than 30 days after the close of that limitation year.

Perhaps this is academic, but don't after-tax contributions have to be made by January 30?

I guess it would be a disregarded entity, but XYZ is the owner, not Joe.

I can't answer Q1 so I'll leave that to others. But I don't see anything specifically not kosher other than I'm not sure what they're trying to accomplish unless it's hiding the real ownership. The LLC can't be a partnership, though, with just a single owner.

I do agree, but 2 things come to mind. 1. What is the point of company C? The only one benefitting from that arrangement is the 50% unrelated owner of company C. 2. Heavy stuff for a retired person.

Agreed with Lou. I prefer that combination in fact.

Belgarath is correct. Also, check the plan document: some of them require the insurance to be surrendered or distributed at normal retirement age.

Assuming the termination resolution/amendment said that all contributions cease and no new people will enter after 4/25/21, then anyone hired after that date is irrelevant. The auditor is wrong.

Class year vesting

It would appear so.

As always, it depends. Can you pass 401a26 and 410b while excluding Company 1? Excluding the husband helps.

I believe you are correct. The only exception I recall is if the employer filed an extension, but then filed before the original due date and didn't use the extension.

And make sure you will pass 414s before you even get started. Clients don't understand how it works and don't realize how rare it is to actually pass.

What do you do with the PW money for a participant that doesn't meet the last day/1000 hour requirement? Don't they HAVE to get the money and it has to be 100% vested?

Just because a participant can do something doesn't mean they have to do so. If a participant can direct the investment of their money but chooses not to, then the trustee of the plan has to set up the account and invest the money for the participant. And are you sure the participants are actually trustees of their own account? That would be incredibly unusual and I'm not even sure it can be done.

There used to be decent directions but that was back in the '80's when this was more common. Ask the insurance agent to get something from his home office. That will likely help. If not, I dealt with a lot of them back in the day and will help as I can. we can discuss if you prefer.