ETA Consulting LLC

This would be a judgement call. Some would argue that many calculations yield earnings that are negligible in amount, but part of the 'punishment' in late deposits is in performing the calculation and making the earnings adjustment (regardless of the size); and the merely marking no on the Form 5500 would be too convenient. Others would question what DOL auditor in their right mind would challenge a late deposit so small in amount that it yielded such a negligible amount; that there really wasn't any significant harm (or potential for harm) to the plan. This argument may be supported by showing that the event may have been attributed to a one-time oversight that was immediately corrected. It's just a judgement call. I'd deposit that earnings and report the event before losing any sleep over it, but that's not to say I would actually lose sleep by not reporting it Good Luck!

Correct, it's all semantics. A loan offset is an actual distribution. An actual distribution cannot happen without a distriubutable event. When is loan is defaulted, the loan becomes taxable (deemed distributed until there is a distributable event allowing an offset). There is no such thing as a deemed distribution when there is a distributable event. "Deemed distribution" is a method of immediate taxation since assets are not distributable under the terms of the plan. I see it all as sematics. Good Luck!

Accrued interest is part of the outstanding balance. When the outstanding balance is offset, then there is no more loan. Good Luck!

Creating separate plans in order to keep both plans below (or from approaching) 120 is a strategy I have employed on countless occassions. It is an effective strategy, but you must consider it from all angles. You don't want to exclude employees from a plan for not having 3 years of service (i.e. not hired before 2009), as that would violate the service requirements. However, you can do better on the determination. Heck, I have even seen plans (identical in design) where the only difference was the last digit of the social security number (odd or even). Just ensure you don't violate any other statutory rule such as age/service requirements. When you compare the cost of an additional plan to the cost of an audit, sometimes it's worth the additional plan. The plans don't even need to be tested separately, just defined separately on different documents (each with their own employees and own Form 5500). So, it should always been a consideration; even if you don't do it. Good Luck!

Sure. The participant has reached a distributable event under the plan. It should be offset immediately, since severance of employment is a 'distributable event'. Correct. The loan remains outstanding and restricts your ability to take additional loans. There would be no deemed distribution since the individual already has a distributable event. So, the loan would be offset immediately. Good Luck!

No. Good Luck!

Sure. Good Luck!

"Like" Sad when a 15 minute analysis could've prevented the "potentially" 15 weeks (or even 15 months) of work required to fix it. I don't think I ever learned to reconcile this part of our industry. You know the same individuals who dropped the ball on this one likely dropped the same ball on tens (or even hundreds) of other similar circumstances. Just a little harmless vent

Yes, that is possible. You should ensure the client doesn't become a victim of the 'butterfly effect' when you implement this type of strategy. Legally, it is possible; happens all the time. Good Luck!

They are "likely" to meet the affiliated service group rules under 414(m) of the Internal Revenue Code. As for a Controlled Group, there doesn't appear to be any overlapping ownership outside of Dr. Smith's 100% and 50%. This may easily change when you attribute ownership under the IRC Section 1563 Rules. For instance, if the other owner of Company A has a "right to first refusal" requiring him to sell his ownership to Dr. Smith should he ever decide to sell, then this would equate to Dr. Smith owning 100% of both companies. Here is where you'd likely have to pay someone to ask all the questions that need to be asked, but on the surface they are not a controlled group. An affiliated service group deals with a different set of rules. You already have a shared HCE for both companies. If once receives a significant portion of income by providing services to the other (or the other's clients), then you could easily have an affiliated service group. The details; questions you must answer in order to perform the analysis, may seem somewhat endless. The IRS does actually performs the affiliated service group analysis should you submit a filing to them making that request. Good Luck!

Yes. The less restrictive provisions must be maintained. This is one of the major considerations when deciding whether to terminate a plan and roll it over or merge the two plans. Good Luck!

Company A owns 50% of Company A? Need detail Who Owns the Company A that owns 50% of Company A? Does Dr. Smith have a first name? Is he a direct owner of any portion of Company A or Company C? Is he related to any of the owners of Company A or Company C? Who is direct owner, is it 50 - 50? Need more detail. Good Luck!

Even though it is a Hybrid Plan, the Cash Balance is still a DB plan. This means that the benefit that is paid will be 'defined under the terms of the plan'. Typically, that amount has "NOTHING" to do with the "actual" plan assets; it's a hypothetical. So, if the plan's investments outperforms the crediting rate, it doesn't impact the hypothetical account balance. Good Luck!

No. It's just a deemed distribution and a Form 1099R is issued. Is the owner eligible for a distribution from the plan (i.e. age 59 1/2)? Good Luck!

No, unless there is a provision specifically recognizing predecessor service for the leasing organization. So, it becomes a choice to the plan sponsor whether to bring them in immediately, but (as you stated) nothing required by statute to bring them in. Good Luck!

A deemed distribution is still an outstanding loan until there is a distributable event (i.e. age 59 1/2 or termination of employment). Good Luck!

The vesting "Schedule" would remain at 40%. However, her 100% vested dollar amount would not change. You'd likely have to create an additional recordkeeping source for those previously "partially terminated" but rehired. You may not reduce the vesting percentage on dollars that are already vested. Good Luck!

What does the plan's document state? Does it state you may not roll over any amount into a vendor's account unless the vendor (or TPA) agrees to separately account for that amount. Always! Always! Read your plan! We can all provide hundreds (even thousands) of possibilities; but reading the language in the plan (and determining how the plan's language and the contract language differs; while remaining open to the possibiliity that someone's just making stuff up). Good Luck!

Arguably, you must offer both at the same time. Nothing in the rules Poje just quoted stated "subject to the terms of the plan". It seems to imply the plans must offer the participant to designate "any proportion". Technically, it's a pre-tax deferral before anything else. All you are doing is designating a portion of it as a Roth Contribution; hence the term "Designated Roth Contribution". The question is whether the plan can say "if you choose to make such a designation, then you must designate the entire amount". I don't believe you can based on Item #2 in Poje's post. Good Luck!

You can amend to terminate through resolution, but you'd typically want a definitive amendment to terminate. The amendment effectively triggers immediate vesting (which is already incorporated into the plan "if" terminated) and a distributable event. You would want your amendment to specify the termination date. Good Luck!

No. He would, then, have to turn age 59 1/2 (or meet some other exception to the penalty). Good Luck!

It's legitimate. Good Luck!

I think it is always a good idea to recordkeep the money sources. You would obviously want to differentiate a rollover source (which allows for immediate distribution) from the deferral source (that is restricted by both statute and the written terms of the plan). Upon taking over the plan, it's always a good idea to "draw a line in the sand" to ensure proper administration going forward. Now, if the owner is above 59 1/2 and fully vested in all sources; I "probably" wouldn't bother. Good Luck!

Doesn't appear to be one. There is no attribution between son and father since neither owns "more than 50%" of the company. You should be sure to account for the affiliated service group analysis as well. Good Luck!

Yes. If their beginning 2012 count is less than 100, then you can file the small plan form. Good Luck!