JustMe

If I have a controlled group where one entity maintains a fully insured plan and another entity maintains a self-insured plan. For 105(h) testing purposes for the self-insured plan, it will consider those benefitting under the fully insured plan as "not benefitting" under the self-insured plan, correct?

Can a cash balance plan have a full calendar year plan (i.e., effective date of 1/1) if the entity only came into existence in the middle of the year?

We recently took over a tribal government plan and the prior TPA has been filing a Form 5500 for the plan since its inception. This plan truly qualifies as a tribal governmental plan and so it is not subject to the Form 5500 requirements. Should we file for the 2020 plan year and mark that it is the Final Form 5500 or not file and, when the IRS sends a letter requesting the filing, respond that the plan is not subject to the Form 5500 filing requirement?

I have a client with a NQDC and the participant has been issued a Form 1099 each year for the investments. This is not correct, is it?? So this should go to the employer to consider on their corporate return??

I wanted to revive this thread as I have a similar question. Any thoughts?

I recently discovered our client is a part of a controlled group (newly established in 2019) and one entity maintains a SIMPLE IRA and the other a 401(k) Plan. Good news, we're still within the exclusive plan transition rule under 408(p). Bad news is we're beyond the 410(b) transition rule. What now? In addition, if the SIMPLE remains and those employees are NOW eligible for the 401(k) plan, does the (k) plan need to be amended to exclude the employees benefitting under the SIMPLE IRA plan or are those employees eligible to participate under both plans if they so desire so long as they don't exceed the 402(b) limit? If the employees could be eligible for both plans, is there a coverage test for the 401(k) plan if all employees are "eligible" under the 401(k) plan? Also, just to confirm, I'm right that if the employees previously employed under the entity who sponsored the SIMPLE IRA plan are now working under another entity within the controlled group, such employees must still be eligible for the SIMPLE IRA (contributions coming from an entity who does not sponsor the SIMPLE IRA) as if the plan sponsor of the SIMPLE IRA were still a separate entity, correct?

Same facts as above, but with a twist. How about if an employee was eligible to contribute during 2020 but didn't and then terminated before the end of the year? The plan "technically" didn't cover this employee, so could the plan file a Form 5500-EZ? Or does the fact that another employee was eligible kick them into Title I coverage?

I have no clue. Not our current client. I'll recommend your suggested path. Thank you!

I have a similar issue with a for-profit entity named as the primary beneficiary for a deceased participant and the "remainder" of the assets to go to the children. In this example, if the funeral home is the beneficiary, who pays the taxes on the distribution? Should the payment be treated as a cash distribution to the deceased participant and the payment be grossed up 20% to allow for a 20% mandatory withholding with 80% paid to the funeral home? The Form 1099-R names the deceased participant as the payee?? Other suggestions?

I understand that a SEP may exclude union employees, but may an employer have a SEP plan for non-union employees and another SEP plan for union employees? How about 2 SEP plans for 2 separate union groups with unique collective bargaining agreements?

The 404a-5 Regs. require that plan participants be notified of any fee changes 30-90 days prior to the effective date of the change. From a practical standpoint, how are TPAs handling this requirement if you takeover a plan and the distribution/loan fees are different from what you charge? Do you make a note in your system not to change the fees until XX date?

We have a NQDC plan and the Plan Sponsor wants to terminate it since no employees are funding to it any further. There is one participant remaining with contributions invested in an annuity. Participant doesn't want to take a distribution so there is no request to accelerate pay out. Can the plan be terminated with an account balance remaining in the plan, or must the assets be distributed upon plan termination? If so, would the suggestion be just to freeze the plan rather than terminate it?

All, Thank you for your support. I was second guessing this response and planned on drafting a new response and then got side tracked. I do not agree that the ESOP ownership is disregarded and was going to look into this further. Correct, the ESOP owns 80% of each company. I have asked if the relationship is a parent-subsidiary relationship and the underlying ownership breakdown of the ESOP in case I need to consider a brother-sister controlled group scenario. @Bill Presson - am I barking up the right tree with my questions?

Thank you!

An ESOP owns 80% of 2 different corporations; ownership is as follows: Company A: 80% ESOP 10% Individual 1 10% Individual 2 Company B: 80% ESOP 20% Individual 3 Based on the 80% ownership, is there a controlled group, or is the ownership interest by the ESOP disregarded for controlled group purposes?