Larry Starr

Under the current rules, it is perfectly ok. And it is in the spirit of the program which is to spend money on employee compensation, and luckily, retirement benefits and health insurance fall into that category.

CRDs are an option to add at the employer's level. What is so good about CRD is that whether the plan calls it a CRD or not, the participant can self certify it as a CRD and treat it as such. The plan can still be amended to adopt CRD language, but I say why bother?

Good question! Now, without research (I hope others take up the task), I don't think it is a cutback. You aren't removing participant right to a distribution; you are adding the right to leave the money in the plan which I think it an enhancement.

Thank you for the real question. Terminate the plan officially; that allows a distribution to be made which he can then do as a trustee to trustee (custodian) transfer to an IRA or to his new employer plan, IF THE NEW EMPLOYER PLAN ACCEPTS ROLLOVERS (not all do). Is there a real consulting/retirement firm handling his plan? They should know this answer.

One has nothing to do with the other. They can make deferrals if they have a plan that lets them make deferrals. Deferrals come from payroll, so it has nothing to do with PPP money.

A sole proprietor NEVER terminates. A sole prop is an individual, and until he dies, the sole proprietorship will exist. So the answers to your stated questions: 1) No. 2) No. A RE agent is a sole prop (unless his business is incorporated). Whether he moves from one agency to another OR NOT, he is still the same sole prop. Hopefully you got my message that he never terminates. Even if he stops selling real estate, he is still a sole prop (just not making any money). This is not a facts and circumstances issue. So now, why don't you tell us the real issue; WHY are you asking this? How old is your sole prop? Does he have any employees? Provide as much detail as possible as it will no doubt be important to know.

Sorry, but anyone who relies on a document that automatically includes other members of a controlled group is looking for trouble. That language should never exist. One company (even a member of a controlled group) CANNOT compel another company to have a retirement plan, so that language does nothing but cause potentially impossible results. If you have plan language that still uses that language, consider getting rid of it. If you have another member of a controlled group that needs to be part of a plan, have that entity formally adopt that plan.

The problem with your presentation is that his account never goes down to $55,000. It continues to be $90,000 BUT he has an outstanding loan of $35,000. The loan is an asset of the plan (or his account), so his vested balance hasn't changed. The second loan will be based on his account balance, which as noted, it the $90k number. Of course, in calculating how much is available, the outstanding loan balance (actually, highest outstanding balance in the prior 12 months, which in this case would be the full $35k) need to be taken into account in applying the maximum loan value.

Correct; in setting up a new plan, one of our document options is to include an additional adopter. Our document system then produces the appropriate signature documents to include both entities. Everybody signs as appropriate and you are all set!

What you need is a retirement consulting firm that will take care of your situation, not "prototype plan documents".

It's now 8 days later and the OP hasn't clarified his post. Annoying at best!

Huh? Each employer already has its own EIN. For a member of the controlled group to adopt the plan, you need an amendment whereby that employer adopts the existing plan. In our SMM we include the information on the adopting employer which does include their EIN. So, what are you actually asking here?

There is no such thing as a "hard" termination. He either ceased employment when he stopped having work and getting paid, or he continued being an employee and was paid or was on a leave of absence. I vote for him being terminated. Someone who works like that and comes in and out is actually routinely being terminated and then rehired. The termination is a matter of fact; was he terminated or not. There is no necessity for an "official" termination, whatever that is. The fact that HR screwed up is just normal for most HR folks.

You are correct; there is nothing that makes this unacceptable so far. Of course, we could always get some more "guidance" that we won't like, but so far this one is not (apparently) on the table for discussion. That can change. As to what they had "in mind" when they drafted the CARES act, I would not be so bold as to suggest they were even in their right minds when drafting this monster!!!!!

Too late; he has a distribution which is a fact under the plan rules.

This is a question for their labor lawyer who can help interpret CA law. Normally, an employee who doesn't show up for work after a few days is no longer employed. The reticence to call the employee terminated may or may not be justified (I'm guessing it is not as he failed to show up for work without any notification) but the lawyer can best answer.

We are 100% in agreement. It can be pesky however to make sure you are not overstepping your "privilege" only to find out that everything you said is discoverable and possibly bad for your client. The watchwords here are be very careful in these situations and consider the issue of privilege before you go sending emails that might not be in the best interest of your client if discovered by "the other side". FWIW.

This is not the venue for your kind of situation. You need to consult competent counsel in your area who will be best able to help you through these issues. Best of luck.

Mike, the employees who were impermissibly left out have civil claims which don't involve IRS and all discussions with the acct or EA(s) would be discoverable, FWIW. Better to have an attorney involved who hires the acct/EA and thus the work done by them becomes lawyer work product and would have privilege.

That could very well be, but I believe that provides no privilege with regard to employees suing for their rights; I think, unlike their lawyer, their EA or even CPA will be subject to complete discovery by the employee's counsel. I think that's the way I remember it. 7525 offers some protection but only from the IRS and never in a criminal matter, whereas the atty has complete privilege even (especially) in a criminal matter. FWIW. Correct me if I have mis-remembered that provision.

Only because you disagreed with me even after I had already noted my "6 of 8 week" rule, which it appears is the crux of the disagreement!

You are (probably) correct. I agree with you, but there are some people who say that once you file your return by your regular due date, any extension received is null and void. I don't agree, but I prefer that under normal conditions client wait until a day AFTER the regular due date and then file under their extension so now they clearly do have to the end of the extension period to add more money (and file an amended return). What is different here is that IRS extended the original due date, so I think you are not operating under an actual extension, but a moving of the regular due date, and therefore you are still BEFORE your regular filing date and you can put more money in and file the amended return, but you are still not on extension. Short answer: I agree with you.

I wish the OP will respond. He says this is new money that was just deposited into the account and talks about using them as "loans". So, if what he really means is that the company just borrowed $400k and it is sitting in their account, then, as I said earlier, that does NOT really affect the value of the company, since the assets might be increased by $400k, but so are the liabilities. LOANS to businesses do not increase the VALUE of said business. But of course, we really have no idea what the OP really means since his OP is so short of details!

Shhhhhh....you'll wake us ALL up!

What privilege is the issue? Neither lawyers nor accts nor EA (either flavor) have lawyer-client type privilege. Is that what you are talking about?