JesseQG

Right, the dual eligibility would bring everyone into the plan regardless but what I'm wondering is if by granting predecessor service for eligibility purposes as well, does it create a situation where I can disaggregate otherwise-excludables (the dentist, his spouse and one staff member; since the others naturally satisfied the statutory eligibility requirements while working for the prior owner, service for which is being granted in this plan by recognition of predecessor service) thereby lowering the costs associated with getting him the maximum allocation for the first few years?

I have a scenario and I want to see what you all think. A dentist is purchasing a practice (asset purchase) as of 9/15. He will have had nothing to do with the practice prior to purchase; no employment. He wants to start a cross-tested 401k PSP plan right away and wants all nine staff members eligible immediately and then wants to shift to statutory eligibility requirements moving forward. If he were to recognize predecessor service for eligibility purposes, then everyone will be eligible right away except one of the nine staff members, the dentist and his spouse. If we then add a dual eligibility bringing the three of them into the plan, those three are otherwise excludable employees and for 2017 and 2018, and may be disaggregated from the the other staff members for 401(a)(4) general testing. Anyone see any problem with this line of thinking? Do you think recognizing predecessor service for eligibility plus using dual eligibility is problematic? If not, there are no HCEs in the non-otherwise excludable group so it passes automatically. Following that line, if for the otherwise-excludable group I’m passing 401(a)(4) on a benefits basis, is it necessary to allocate a gateway contribution to all staff members or only the one staff member in the otherwise excludable group?

Thank you for your response! Her company was an adopting employer to the plan sponsored by the affiliated service group. So, a distribution (of at least elective deferrals and safe harbor contributions) from that plan (to her (age 45) and her employees who have yet to reach 59 1/2) should not have occurred once she sold her interest in the partnership even though by selling her interest she was no longer a member of that related group, correct?

A dentist was part of an affiliated service group that sponsors a 401k plan (still ongoing). She was paid through her own entity and her staff was paid by a partnership under which she had partial ownership with two other dentists (who were set up in the same vein). In 2016 she sold her interest in the partnership and pulled the staff that had been working at her location from payroll under the partnership to payroll under her entity (former A-Org). Is there a severance of employment here? Can she and her staff take a distribution of deferrals from the 401k plan that the partnership she sold out of sponsors? She’s wanting to start her own 401k plan now and we were planning on spinning it off but we found out that distributions had been processed for her and her staff from the plan she formerly participated in as a related employer. I believe the first paragraph of Section III of Notice 2002-4 states that these distributions were okay but I’m getting mixed opinions with some of my colleagues. Some believe that since her entity was formerly a member of the ASG the only options are to leave the funds in the plan of the ASG or create a spin-off plan. So, do you believe that they’ve violated distribution restrictions?

A participant took a rollover distribution in 2012. The custodian distributed her profit sharing balance as though it were 100% vested; she was only 60% vested resulting in a distribution of around $2,000 more than she should have received. The forfeitures are used to reduce the following plan year's employer contributions. Repeated attempts to contact her and request she return the funds have been unsuccessful. The plan sponsor has stated that he will reimburse the plan for the amount that should have remained. Should an amended Form 1099-R be filed? Technically, a portion of her rollover is ineligible. If that's the case, should that portion be taxable? Thanks