Larry Starr

The answer to your question is NO. ?

It's a careful balancing act. As an Enrolled Agent, I get to practice Federal "tax law" as any accountant does. In addition, I get to practice ERISA "law" because that is what I am licensed for by my Federal license. That is also why my QDRO work is ALWAYS done through a lawyer since that is practicing domestic law which I cannot do directly but can be hired by an atty to produce work product for them. And I have been known to "cross over" the line sometimes! ?

They can't pay someone W-2 wages UNLESS he is an employee providing services. Otherwise, it is a dividend to a stockholder and it is NOT deductible to the corp. I would suggest they are giving the WRONG ANSWER. They should be saying something like "he consults to the company all year long for which he is paid the $27k", and they say that is over 1000 hours a year. They need to stop saying they are violating the law by paying W-2 style income to a non-employee!!!!

Which is saying that you don't get a new EIN for the plan; it is the SAME plan (thus, same EIN) but just a new sponsor.

Agreed; the answer is always "get a bond". However, it is disclosed on the 5500 and that's not a good thing to not have when it is legally required. It may be legally required, but it is also STUPID. Most of my clients are pretty smart, and if they are going to steal money from the plan, they are probably going to steal more than 10%!!!!

Much better to not use out of date references; our business changes too quickly to use a chart that was set up in January, 2016. As you now know from the other responder, my original posting of the due dates is correct.

You should be asking YOUR ATTORNEY for this advice. This is NOT a place for legal advice of this nature. Obviously, you need an attorney who knows what he/she is doing; that's often the hardest part of the process. Good luck.

My fellow responders are all correct; what they didn't spell out enough (for me, anyway) is that you need to have a professional handling and answering these question. This is not "do it yourself" stuff. You will do SOMETHING wrong.

The issue is that they are not considered an employer for purposes of their retirement possibilities regarding income from their primary insurance company because they will get a W-2. Therefore, whether they are eligible or not for the plan, they are not eligible to set up their own plan on those funds because they are not an employer. However, many insurance folks have outside income from other insurance companies and products and for that they will file (usually) a Schedule C and for that income they can have their own plan.

"Get a bond". We actually handle that process with the vast majority of our clients, so we would just do it!

I'm only responding to a piece of this; you can absolutely do a -11g amendment to add contributions to the OEE to allocate a "profit sharing" contribution to those employees who otherwise would not get one under the normal operation of the plan. I assume there are no HCEs in that group (as the -11g has to pass non-discrim on its own).

No reason for the contribution to be in before the return is filed. Lots of clients file their return earlier than the due date (or after due date but before extended date) but don't put the money in until after the return is filed and that's just fine. We just remind them how important it is to get the money in by their due date (whichever one is applicable) or they are going to have to file amended returns AND have other problems as well (plus re-do fees from us for having to redo the annual valuation).

I have no idea what your 2025/26 reference is; what does that sentence mean?

Your first statement is incorrect; you have different rules for different types of entities now. For calendar year entities: S Corp return due 3/15; extension takes it to 9/15 (which is same as the old rules). C Corp return now due 4/15; extension takes it to 10/15 (which is a change that makes both dates one month later). As you can see, the first due dates and the extension date are DIFFERENT for S Corps and C corps. And for comparison, sole props are the same as C Corps (4/15 and 10/15); Partnerships are the same as S Corps (3/15 and 9/15). On your third bullet, you are not clear as to what is the fiscal year of the entity nor what kind of entity; that is necessary to answer your question. Assuming plan and entity have the same fiscal year, if the corp is a S corp, the contribution is due 2 1/2 months after year end (8/15) or extended to 2/15 (new rules, not old rules). If a C corp, the contribution is due 3 1/2 months after year end (9/15) or extended to 3/15 (new rules). We don't really care anymore about the old rules now do we? For your question about when did this change, did you consider goggling "when did due date for tax return for C corp change"? You might find this: Tax provisions included in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, P.L. 114-41 modify the due dates for several common tax returns and certain information returns (W-2 and 1099-Misc). The act set new due dates for partnership and C corporation returns as well as for FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), and several other IRS information returns. The changes are effective for taxable years starting after December 31, 2015 (2016 tax returns filed in 2017). Here's a chart you can refer to: https://www.aicpa.org/interestareas/tax/resources/compliance/downloadabledocuments/due-dates-summary-chart.pdf

We don't do a plan unless we do all the plans of the employer. Too many things to slip through the cracks.

What you need is a competent lawyer; nothing on this board is going to replace that.

And all you need to do is check with whatever entity name is on the account paperwork and confirm as to whether or not it is an actual IRA or just a mislabeled plan account.

How long ago was the plan set up? What has been done in prior years (assuming there are prior years)? I don't know if you or your firm set up the plan (you don't say), but if you did, sorry, but the problem originates with whoever did set it up who apparently did not know what they were doing so they didn't discover the basic information needed to design the plan. Were there prior years and did the partners get contributions in prior years? Are there participants other than the partners? Depending on the answers to the above questions, they could be in a whole heap of trouble!

AMEN!

Yes; understood. Another good reason for pooled plans! ?

Well, though the original poster did not qualify the comment, I have to think if it was a total distribution, that would have been included in the question. But of course.... maybe not!

I vote for no reporting, and booking only the $25k deferral and ignoring the four cents.

When in doubt... RTFD! What does the plan say about inability to pay out because you can't find the person? Our document allows for forfeiture after you have done all the designated processes of searching.

You would take $100 from the account, make a $1000 distribution with $800 to the participant and $200 to withholding. The account is debited $1100. 1099 would obviously show $1000. I am surprised you even suggest otherwise.

It's a major problem no matter what. Mike's advice is correct. My question is who was doing the work before you took it on and how did they allow it? I think we have some malfeasance there.