RatherBeGolfing

Thanks. I'm thinking the opinion has something about ASG in it and the advisor is getting his terminology mixed up.

Dr. Payne owns 100% of Payne PLLC ( A ) Dr. Aichen owns 100% of Aichen PLLC (B) Aichen Payne PLLC (C) is owned by A & B A owns 60% of C B owns 40% of C Per attribution, I would say that Dr. Payne owns 60% of C and Dr. Aichen owns 40% C. Dr. Payne also owns 100% of another practice and is considering his financial advisor wants to install a 401(k) plan. The advisor has been told (supposedly by a lawyer) that because the doctors as individuals own 100% of their PLLC's which own their shares of C, they have a controlled group. I have asked for the exact wording of the opinion, but I just don't see a CG issue here. Am I missing something?

Yep, that is how we handle non-payroll loan payments to John Hancock. Participant cuts check to ER, ER cuts check to JH and everyone is happy.

I agree. My point was more along the lines that the employer can't throw their hands up and say "sorry we don't have it". If they don't have the records, they have to get the records from a service provider, they don't have another option.

No question about it, it is the PA's responsibility. And they have to have the records, they are required to by law. If they don't, their service providers do. If the service providers don't... Can the PA even execute what is in the QDRO if it has no records? I just don't see how.

FWIW, I use 2K for 401(k)+SHM only plans. The instructions are unclear at best and generate inconsistent answers, which was part of the reasoning for dropping the codes and adding compliance questions to the proposed 5500. I have never heard of the IRS making a big deal of the codes if they are wrong but I would rather use one than omit one.

By not breaking the law...

No No No. You cannot exclude someone based on national origin, period! Excluding someone because they are not a US citizen is excluding based on national origin. Title VII civil rights act ring a bell? You do not have to be a citizen to have a valid SSN. Many non-citizens have valid SSNs.

And they probably also missed the "with no US income" part

You are correct, I forgot about the substantial presence test which could include an someone who is not here legally as resident alien for tax purposes. I would still avoid the term for plan purposes and use reasonable classification.

John Hancock keeps 2 years of statements on the website. it is possible to get older statements from them but it is like pulling teeth because the rep has to put in a lot of work to get it. Keep pushing when they say they can't get and eventually they will get it for you.

Bird you are correct that the selection is in the loan policy. However, the basic plan document also provides : Section 8.06 (f) Security. All loans shall be secured by no more than one-half of the vested portion of the Participant's Accounts (determined immediately after the origination of the loan) and such additional security as the Plan Administrator may deem necessary. All loans made to Participants under this Section are to be considered Trust Fund investments and shall be segregated as provided in Article 9 hereof unless the Plan Administrator provides otherwise. Section 9.02 (c) Loans. If the Adoption Agreement does not permit Participant self-direction, any assets that are held in the form of a Participant loan made pursuant to Article 8 shall be treated as a segregated investment unless otherwise provided by the Plan Administrator.

I'm going to jump in here and say no. You are coming very close to discriminating based on national origin which is (or could be) a civil rights violation. Find a better way to exclude those people. Also, there is a huge terminology issue here. A resident alien is a lawful US resident who just happens to be a non-citizen. A resident alien would have none of the issues the OP mentioned like SSN, legal status, etc.

I'm not a big fan of loans in the first place, but I see it however it is defined in the document. I have no problem treating it either way. Post EGTRRA, I have not seen a document silent on it so it really isn't a judgment call it is just a matter of following the document. The other participants are probably not seeing decline in their earnings due to the loan since earnings on those assets would have been allocated to the participant with the loan.

Thats my bad, I misinterpreted your first comment as saying loans from pooled assets should be treated as an investment of the trust rather than separate from the trust.

I wouldn't go as far as "should". It is not uncommon to treat a participant loan as a segregated asset (some documents use term participant directed asset) even when you have a pooled trust.

I may or may not have liked this post... We will never know...

I agree.

Might be an issue with how it is coded in the compliance module. I would call FTW support and have them look at why it is bringing the participant in.

Do you use FTW documents? Is eligibility "6 months" or "6 consecutive months"? Here is the difference (from FTW VS document): Specified Months - Elapsed Time - Completes a specified number of months during which the employee completes at least one Hour of Service during the beginning and ending months. Specified Months - Consecutive - Completes a specified number of consecutive-months,during which employee completes at least one Hour of Service in each month.

I don't think the caveat is enough if you believe that your report / calculations will be used to violate or evade the law. You are obligated to inform the client of the consequences but you also have to remove yourself from the violation.

Thanks MoJo. I don't have any clients in CA but this is an interesting development for sure. The most I have seen in Florida where the bulk of my clients are is a subpoena for plan documents and testimony in highly contested divorces. Those cases usually settle with our involvement being limited to document production but they are getting more an more aggressive here as well so who knows...

Very interesting. That is a little too much discretion for me to be comfortable (may impose / reasonable knowledge / may be issued) but thats just me. Im curious about the California cases... Do they present any issues or implications for you as a service provider, other than being enjoined from distributing participant balances?

Even if the TPA is not actually preparing the return, you still have the issue of control of work product. The short answer would be you can't perform professional services if you have reason to believe that your work will be used to violate or evade the law. So you can't do the work but wash your hands of it just because you prepare the return. Circular 230 also includes language regarding errors or omissions from any return, not just the returns prepared by the practitioner.

I agree, I take my client's representation to me at face value and I don't cross that line either. If a client tries to involve me in a tax avoidance scheme or fraud, I would just resign and move on. Also, I don't think any of the CPAs I work with would tell me "oh by the way, Dr. Payne is giving his kids a salary so they can defer but they they never actually work for him". Even if that was the case, why volunteer that information in the first place?