ETA Consulting LLC

You're right! Good Luck!

I agree with Bri. Good Luck!

What I would caution against is making the initial plan year for the solo (k) a full 12 months. I would run the first year from August through December in order to avoid an overlapping period during which both companies maintained plans while in controlled group status. This may cut your 415 limit to 5/12th. Just a thought. Good Luck!

Severance of employment is on a controlled group basis. Good Luck!

What does the plan say? Typically, the plan will be written to cut the contributions off at the 415 limit. In your case, the plan clearly made an excess annual addition consisting solely of Employer Contributions. Your plan may reference EPCRS, which may prescribe holding the Excess Amounts unallocated in the participant's account until they can be exhausted. I cannot see how this would be distributed to the participant; even though they are entitled to the amount and those amounts may not be reallocated to other participants. Good Luck!

This does not pertain to the plan, so it cannot possibly be a problem. This is merely the company deciding how (and what) to pay their employees. Good Luck!

I don't think it would be "required", but necessary if you were to ever use forfeitures to offset these contributions. Good Luck!

I think I see what you're getting at: Owner O sells 60% of Company A and becomes a 40% Owner in A. Owner O, who is now a 40% owner in A, creates Company B and is 100% owner in B. How is that a controlled group? Let's assume that B was created at a time O owned 100% of A. Now, A & B would be a controlled group. At the time O sells 40% of A, they would cease to be members of a controlled group. This must be established before even discussing Compensation. Any employees of Company B would be free to do whatever they want without regard to A after they are no longer members of the same controlled group. Once we determine controlled group status; and when it ends, you would then determine if there is a 'severance of employment' for each employee as they move from Company A to Company B. I think that's what you're getting at, but would be sure to carefully flow chart each fact pattern as it relates to the applicable rules. You'd start with the detailed Controlled Group Analysis: 1) Does a controlled group exist? 2) If so, when. 3) When does the companies cease to be members of a controlled group. 4) Is there a severance from employment when an employee moves from one company to the next. That's how I would approach it. When I'm done, I'd recheck my facts against the rules. Good Luck

Appears to be an Affiliated Service Group. You have a sole proprietor receiving a significant level of her sole proprietorship income from performing services to a salon in which she's a majority owner. Good Luck!

Ceasing??? I was thinking increasing or decreasing. Since he is not a 5% owner in the plan year ending in the calendar year he turns age 70-1/2, then he would not have to begin is RMDs. Now, this assumes it is a calendar year plan. Keep in mind, the 5% owner measurement is during 'the plan year ending within the calendar year'. So, if it's a January 31st PYE (for argument sake), he'd have to begin is RMDs. Good Luck!

Define 'creasing' .

You're comparing all exclusions (safe harbor and non safe harbor) to total Compensation. This can create quite an anomaly. You can have a definition of Compensation with only safe harbor exclusions that would otherwise fail the Compensation Ratio Test. Excluding bonuses or Overtime may actually help the ratio, but you still fail the test; and find that you're not safe harbor. I confronted this once many years ago. I documented this anomaly and had to client change the definition of Compensation. It doesn't seem logical, but that it how the test seems to be applied. Good Luck!

You would have an overlapping period in the year of amendment. So, if the participant doesn't work 1000 hours between 9/10/2016 - 9/9/2017, then you would measure from 1/1/2017 - 12/31/2017. You wouldn't start a "NEW" period at 9/10/2017 because the plan has been amended prior to that point. Good Luck!

S-Corp filing as an LLC??? Or LLC Filing as an S-Corp? Please clarify.

You can perform a review of the plan while putting yourself in the auditor's shoes. If you find a form or operational defect, then correct it prior to shutting the plan down. Presumably, this happens (to some extent) when you submit for VCP. When I'm submitting VCP, I try to include every error I can find in order to obtain a Compliance Letter on that error. Then, it would be incumbent on the auditor to discover something that you didn't (in the event the plan gets audited). You can even use the Form 5310 as a guide without actually submitting it. Those are my thoughts. Good Luck!

What are you trying to do?

I 'think' the employees may be able to write a check for this one. I know that elective deferrals must be made from compensation that has not yet been received. I don't believe that same standard applies to after-tax [under Section 401(m) ]. This is just an initial thought. Good Luck!

They clearly made had an oversight. The formula must be definitely determinable; so if the match must be trued up, then it is what it is. What would end up happening is that a portion of the Profit Sharing should've been SHMAC. This should be fixable under Self Correction. Good Luck!

To your point, the IRS has referenced Section 404(n) of the Code as the authority for saying you cannot do that. Elective deferrals not taken into account for purposes of deduction limits Elective deferrals (as defined in section 402(g)(3)) shall not be subject to any limitation contained in paragraph (3), (7), or (9) of subsection (a) or paragraph (1)(C) of subsection (h) and such elective deferrals shall not be taken into account in applying any such limitation to any other contributions. Okay, I stand corrected on this one. I haven't seen this one in my current book of plans, but do know that it was missed a lot during 2002 and 2011. 404(n) was added under EGTRRA. I've never heard of it as an issue until 2011, but never heard a definitive rule. According to the IRS, the definitive rule is Section 404(n). Many of the industry software providers never made the adjustment. I'm glad we had this discussion. I learned something today :-) Good Luck!

This IRS has tried, informally, to suggest that. But, according to the Code, Deferrals are still treated as Employer Contributions for all plan purposes. They are merely made pursuant to employee elections. I can see the logic behind them changing it to be more consistent, but (like many other things) they need to give official guidance that can be relied upon. All they have to do is rule that deferrals are no longer "employer contributions". I'm not sure, but that may require an act of Congress; the 401(k) Code seems to define them as Employer Contributions. Good Luck!

No, unless it has a 401(k) Provision. Good Luck!

The opt out period should end on 11/1; and deferrals should begin on that date. Good Luck!

True. While I don't think this is an issue, I believe the contributions (even the earnings) would be tested a contributions in the non-discrimination tests. The amounts being deposited are merely used to appease the DOL with respect to meeting the prevailing wage requirement. If those amounts failed (and the DOL required earnings), then these are still 'plan contributions' from a non-discrimination perspective. Many plans have language (or at least should have language) that would preclude the possibility of an HCE receiving a prevailing wage contribution that could put a strain on the non-discrimination tests. Good Luck!

No, you would just assume the deferral limit for the individual age 50 (or older) is $24,000 and ignore the entire notion of a catchup. A catchup is, in fact, a deferral. They simply missed deferrals; and that limit would be $24,000. The 2nd part (which does not apply) would be if they were allowed to defer to $18,000 and cut off at that amount; when their limit should've been $24,000. This is, clearly, not the case since they weren't even allowed to defer. Good Luck!

Internal Revenue Code Section 152. Good Luck!