R. Butler

I was actually pondering the motivation for repaying a loan from the ROTH 401(k) source.

I looked it initially as a combo group. X & C are a brother/sister group C & Z are a parent/subsidiary group. Under the combo group rules if a parent org. in a parent/subsidiary group is also part of a brother/sister group, all orgs are part of 1 group.

Why do we have to assume the owner is an individual? For the sake of arguement lets assume Owner is a Corp. Corp. Owner owns 100% of X & 80% of C. C owns 90% of Z. Seems to me you still have a parent subsidiary group. Also I don't really want to think about this too much right now, but I don't immediately see how options, etc. take you out of controlled group status.

Based on the info. you've given your analysis appears correct.

May also want to consider whether a SIMPLE would be better.

I've had that same issue before. If contributions are remitted within the outside time frame I will acquiesse to the boss without much discussion. If contributions are made outside of that time frame I have been able to convince the boss to at least force the client to provide us with their written assertion that the contributions were made timely.

Never tried what you suggest. The plans for which we have sent in filings have all contained the boiler plate language that the plan is void if the IRS determines its not qualified. We explain thta provision to the client from the outset just so they are aware of the possibility.

I appreciate QDROphile's subtle replies.

There are potential controlled group/affiliated service group issues with the situation you describe. They audit. If the companies are either a controlled group or ASG, both Co. A & Co. B would be a single employer for purposes of the SIMPLE IRA. Also Co. B would not be able to adopt its own plan if Co. A continued to maintain the SIMPLE IRA. Just looking at your question & the way that it is phrased, it doesn't seem like you have a lot of experience. This situation should be referred with some experience in this area. Hope this helps.

They are probably thinking that adding the profit sharing component is equivalent to adopting a separate plan. Without researching this it seems to me that client could adopt a separate profit sharing plan & then exclude years before the plan, as long as client didn't terminate the 401(k) plan within the next 5 years. If there is anything out there that says adding the component is the equivalent of adopting a new plan I am not aware of it right off. It may be worth asking the insurance rep. for his citations though.

We just came at it differently. Certainly Co. B could be an FSO, but as you point out there are no services being rendered to Co. B, so it can't be the FSO in this group. I agree that here and in most ASG cases, it is wise to recommend the plan sponsor contact an ERISA Attorney.

Reduce by the $10,000. The 402(g) limit is $14,000 & all plans in which the individual participates are aggregated.

This is the best I can do.

The professional service corp. exception is applicable only to A-Orgs Based on the facts given I don't see an ASG. Co. A is the potential FSO & its not a service organization.

What do you know? I also went to law school dreaming of being a tax attorney. Not only that, but even without regard to the dream, many think I suffer from a mental deficiency. Lori might be more curious than I am, but if you can tell me anything about crossdressing, its more than I want to know.

A surviving spouse is the only beney allowed to rollover death benefits.

See IRS Notice 2005-5; particulary Q&A 6. http://benefitslink.com/IRS/notice2005-5.pdf

I graduated from law school about 10 years ago. Never really considered ERISA up to that point, but Sallie Mae wanted to be repaid & this small TPA firm offered me just enough money to satisfy Sallie Mae. I've been here ever since. Hope to get into a law firm for a few years to get a broader experience & then maybe open up shop myself. We shall see. Outside of work, I volunteer on one of ASPPA's committees. I'm active in my church. I've been married for five years & have a one year old son. (Being a dad is the most incredicle experience.) I'm a fanatical Univ. of Kentucky & Pittsburgh Steeler fan.

Probably additional lost earnings that need to be credited. You may also need to rerun the 2003 ADP test. Deferrals need to be deposited within 12 months after the close of the plan year to count in ADP test.

Although I agree with QDROphile's response to this, we had a little different take. We did consider calling the AP's attorney. However, even if the AP's intention at the time the DRO was drafted was to take the money & not rollover, what if the AP later changes her mind? The clear wording of the DRO eliminated a rollover possibility. We wanted the plan sponsor to have a clear course of action based on all possible alternatives.

1. Perecentage isn't generally lowered simpley because a plan is top heavy. The plan document should specify how to allocate the cotnribution. 2. I'm not really sure what you are asking, but a company's contribuion does not have to be whole number.

A lot of auditors will stick with the opposite side. We've always reported in those circumstances, but its probably not that significant either way.

Of course you are correct; they aren't subject to Title I. That still doesn't change the answer though. I'm guessing there is a pretty good chance any penalty would be waived. We've had penalties waived in the past for no reason other than the client forgot to mail it.

The initial post asks about audit risk, but it also mentions doing the right thing. While we have all acknowledged that the chances of being audited are remote, but the answer doesn't change. The question really comes down to whats our integrity worth? This isn't a question where there is a shade of gray. I wouldn't advise a cleint to sell their integrity for $750 (the DFVC penalty).

What does the plan document say about forfeiting balances of lost participants? Has the plan been amended for the automatic rollovers? What does the amendment say about rolling over balances of less than $1,000?