ETA Consulting LLC

Up to the date of termination. Good Luck!

So, employees were given a separate election for bonus pay; with the default being "no election -no withholding". As long as that was properly communicated, there wouldn't be a problem. The default could've easily been "no election - regular payroll withholding", but that's not relevant. As long as each employee was given ample opportunity to elect to defer, then there is no issue. It would even be nice if the regular salary reduction agreement for payroll advised that this election is for regular payroll only. So, without actually looking at all the facts, you cannot really conclude there is a problem. Until you ascertain there is a problem, there's really no need to vet a solution. Good Luck!

There is no discrimination without an HCE to discriminate in favor of. So, there are no issues. Just ensure the plan's formula allows the flexibility to allocate the contribution at a different level. Good Luck!

You're asking can you arbitrarily refuse to follow the terms of the plan :-) Good Luck!

I think the safe harbor is automatic because it's an asset sale; which means that there is a termination of employment from Company X on the date of sale for each employee acquired in the transaction. I think the same would apply if it were an equity sale and Company Z decided not to take over the plan of Company X during the acquisition. In this case, those employees are treated as if they have severed employment (at least for distribution purposes). Good Luck!

There appears to be reliance on an 'honor' system. In your hypothetical, it would resolve itself if the IRS taxes the entire pre-tax deferral for the year on the 1040; and taxes it again when it is finally distributed. Let's take the hypothetical a step further. Let's assume the same individual maxes out on Roth Deferrals in plans of two separate employers. Now, everything has already been taxed. As a rule, amounts attributed to the excess Roth will not receive the "Roth" treatment of having the earnings distributed income tax free. Who's going to account for that? The IRS? So, to the point I think you're making, there is a loop hole there. A 50 year old who works for two separate employers can defer $24,500 in Roth in each plan. While this is a violation of tax law, the onus appears to be on the IRS (who will rely on the participant) to assess the earnings on those contributions that aren't eligible for Roth treatment. Is that what you're getting at?

The participant still has to receive the special tax notice (notifying him of his rollover rights). That notice can be sent concurrently with the check. Good Luck!

Yes. Good Luck!

It has been my experience that the punishment being levied in these situations is having to work with the EBSA. You've already performed all the necessary tasks; including allocating the proposed excise tax to the participants as additional earnings. Now, the EBSA agent is saying file the Form 5330 and pay the $30 to the IRS. Sometimes, I just do whatever they suggest (despite the disagreement) to prevent spending additional hours over accounting for insignificant amounts. Governments, by design, are not very efficient. Sometimes, individuals within government take it to the extreme. The entire premise on the allocation of small amounts to the participants is to avoid having to spend time processing a small payment. In the past, I've filed Forms 5330 for less than $2.00. I think it's ridiculous they would suggest the Form 5330 is filed. But, if the reason is that the client has exhausted this method in the past, I'd doubt they would be organized enough to ascertain that. My apologies for the rant. Good Luck!

That could work. Good Luck!

Yes, as long as it passes 410(b) as a standalone plan. Good Luck!

Correct. If I have two companies; one with 10 employees that brings me in about $300K and another one with just me that brings in about $100K. Without the controlled group rules, I can create a solo(k) plan and defer $24,500 plus make a company contribution of another $25,000. That's $49,500 without having a fund a dime to my employees. I could, then, get cute and put another $11,500 in after-tax contributions to reach my 415 limit. Once in, I can roll this out directly into a Roth IRA. The controlled group rules say, 'no way!' First, the deferrals, Employer Contribution, and After-tax would be subject to 410(b). You'd, then, have to contend with ADP & ACP for the deferrals and After-tax. The entire premise of allowing tax-deductible contributions and income tax deferral on the earnings is because of the value in providing a retirement benefit to employees. The controlled group rules are merely a measure to prevent business owners from 'stacking the deck' in their favor by creating another organization and enjoying these tax benefits without providing anything for employees. I'm not emotionally invested in right or wrong, but continue to work diligently to ensure my business owners get the full tax leverage available to them under the rules as written. Good Luck!

A loan is 'deemed' distributed to become taxable when the loan is defaulted, but it's still a loan. So, you must allow the participant the opportunity to repay it. You're not really "setting up an after-tax account", but your tracking the after-tax basis as repayments are made. The source of funds does not lose it's characteristics (e.g. withdrawal availability). Good Luck!

Yes. Good Luck!

That wouldn't make any sense. The repayment of a deemed loan doesn't change any of the withdrawal rights. It merely creates an after-tax basis in the account that funded the loan. Hence, if a person takes a loan from the deferral account and it is deemed, that person has a right to repay the loan. Doing so would actually create an after-tax basis in the deferral account. If the account wasn't subject to a withdrawal restriction (e.g. 59-1/2), then the loan wouldn't have been deemed distributed in the first place; it would've become an actual distribution after non-payment. Good Luck!

Nope. Good Luck!

Are you saying that there is a severance employment? If so, then how?

I think a "Qualified" Joint & Survivor Annuity must be over the lives of the Participant and Spouse. Typically, if the participant is not married, the annuity will be paid out over a single life. When dealing with nonqualified annuities (outside of qualified plans), you may have any joint annuitant. The qualified plan rules require some degree of spousal protection. Good Luck!

Sure. You basically have employment with three distinct Employers; each with their own limits. Beyond that, the 457 plan is not combined with a 401(k) plan for the individual deferral limit either. So, this would be perfectly legal. Good Luck!

Sounds as if he took an actual distribution; outside the terms of the plan. This should be corrected. Good Luck!

I would say "no". Even though (in this situation) the plan will be deemed to pass all non-discrimination requirements under the Internal Revenue Code, it still doesn't seem to meet the exception from being treated as an ERISA plan. To me, it would be similar to hiring a child and putting them on the payroll; still a solo(k) plan for nondiscrimination purposes, but fails to meet the exceptions for preparing a full report. Good Luck!

There are several standards to apply when determining whether a whether a controlled group relationship exists between companies owned by two people who are married. A spouse being part of the other one's business is merely one standard. Another standard would be If more than 50% of Gross Income on one business is passive. With that said, the key is to actually determine if the two companies are part of a controlled group in any way. At the end if the day, they can still adopt on to the same plan. The difference would be whether they are treated as a single employer or multiple employer plan. Good Luck!

Your document said that??? I believe that may have been taken out of context. There is no service class exclusion. You may provide a different eligibility for a service class, but you cannot exclude them merely because they are part of that service class. Good Luck!

Huh?

Your plan is either exempt from Top Heavy or it's not. When making a determination as to whether the plan is meets the Safe Harbor ADP exception to Top Heavy, the written provisions are just as important. You're not merely looking at the actual contributions that were made to the plan. You're also looking at whether the arrangements under which they were made are written to meet the ADP/ACP safe harbors. I didn't read each of your points (short attention span ). But, thought these thoughts may help. Good Luck!