Luke Bailey

Right. A single member LLC is a disregarded entity unless it has elected to be taxed as a corporation.

ERISAGooroo, the rubric for your question seems to ask about deductibility as well, although your actual question does not. I think the payment is deductible by the RK, either way, as a business expense. If paid to sponsor, then the sponsor has income offset by a contribution deduction.

Is it too late for them to get ACA coverage? ACA provides up to 60 days for newborns.

It's the balance of all loans that were outstanding during the 1-year period. Immediately after the new $15k loan the highest outstanding balance of loans in previous 12 months is $50k ($35k + $15k). So completely maxed out. As payments continue to be made on both loans, the highest outstanding in any new 12-month period is going to drift lower and small loans will again be available under 72(p), but plan terms of course may further limit.

BG5150, my comment is based on my guess that they probably don't. But I could be wrong/overly optimistic/overly cynical. And their processes are probably improving rapidly right now (I've seen evidence of that), so who knows. If they don't, maybe they'll start.

I would say yes. I would want to have all of the facts before taking that action. Absolutely agree with that.

Just have the plan to which the money was transferred as a direct rollover transfer it back, with allocable earnings or less any allocable loss. I say "just," but of course the trustee-to-trustee communication with the plan to which it was rolled over will need to be detailed. I think it would be appropriate for he distributing plan to issue a corrected Form 1099-R, but since this appears to have been a direct rollover it probably will not make a difference, nor would it probably require the individual to file an amended 2022 1040, since they would just be changing the amount in the informational rollover box. I doubt the IRS's computers would care. Inform the individual that they have an additional distribution coming from the plan and ask them to complete a new distribution form with respect to the amount. Then distribute it and report on a 2023 1099-R, assuming you get it done in 2023. The amount distributed should be the greater of the amount that would have been distributed to the individual when it should have been, plus the earnings you determine that amount should have received between the time when it should have been distributed and when it is distributed, or the amount transferred back from the plan that erroneously took the amount as a rollover.

Right. I don't think that filing the 5500 is a fiduciary act, even though it's a responsibility of the plan administrator. Could be arguable, but the filing is a responsibility to the gov't, not the plan. Don't know of any case on this. Yes. The case I was thinking of met this criterion. If money was missing, of course they will try to go after that as fiduciary breach and failure to obtan an IQPA could be looked at by EBSA as part of a coverup, which could provide a path to claiming individual fiduciary liability. Amen, amen, amen.

I don't understand the question. If there are no benefit options and, as Peter Gulia posits as an example, the plan is completely employer funded with no ability to opt out, what is there to choose? But metsfan026's question implies that the employee has the ability to choose a benefit option, which would have to be under the plan. Of course, that choice, whether it involved pre-tax dollars under a cafeteria plan or not, would need to be made under rules provided for in some fashion under the plan, which is typically (really, universally) accomplished during an "open enrollment" period established under the plan. No choices (between benefits or between cash and benefits), no open enrollment. Choices, open enrollment. Metsfan026, if you're asking whether an employer must provide employees with choices, no, they don't need to.

I had a similar situation years ago. I think that unless they have grounds to pierce the corporate veil under state law piercing principles, the penalties apply to the corporation, not the shareholders. That was my analysis and experience was consistent with analysis.

I guess their thought is that if it's not amended out, then technically the annuity contracts don't track the plan provisions exactly. I think a lot of times the issue is probably not raised and there's an assumption that by terminating the plan and buying annuities in effect the suspension of benefits provision is amended out.

With Appreciation, "trust agreement" normally means the legal document between the employer(s) and trustee(s) creating trust. The distribution and other disbursement ledger is usually called a "trust report." Just sayin'.

austin3515, the procedures have not changed. What you described worked for my client a couple of years ago.

401(k)thryn, I think this presents a fact issue. If the terms of the account were that while the participant had the right to communicate directly with the broker-dealer to change assets, but could not direct a distribution, this could be OK, i.e., may not cause the assets to come within the participant's dominion and control. It is fairly common. If the participant was able to take a distribution without the employer's direct involvement and approval, the IRS at least would probably argue that the participant had dominion and control of the funds and should have been taxed on deposit. Just my guess as to what they would say. There's a procedure whereby the employee can certify that they included the amount in income and that may get the employer off the hook, although the employer may still be subject to penalties. The procedure is complicated. Otherwise the employer is on the hook for all the tax they should have withheld.

Griswold, are you asking whether they should amend their prior unnecessary filings by filing multiple 5500's for each year for each separate benefit because they didn't have a wrap plan? If that's what you're asking I'd want to thoroughly examine the facts to be sure that they really didn't have to file, but if they didn't have to file there's no need to amend prior unnecessary filings.

The spouse may have contributed to the management of the LLC, but any allocation must be based on facts. For plan purposes both LLC members' self-employment income will be shown on their K-1's.

You also need to consider the nature of the income. Earnout payments from the sale should be capital gain, not compensation. Consulting or receivables would be a different story. Obviously, there needs to be a W-2 or K-1 to the individual for 415 purposes.

And to clarify further, the OP was about 5500-SF, not -EZ. There's lots of good information above about both, but the reader needs to keep the two separate.

Without any paper trail, it's really a toss-up as to whether this as an individually allocated investment, purchased just with the assets of, and for, the owner's account, or a "key person" policy sold by a life insurance agent who couldn't find any other way to sell it. I would advise an adviser such as yourself, AnnCK, that your role would be to ferret out the paper trail, if one exists (they usually do if you dig hard enough) and advise the plan's fiduciary (i.e., the trustee or person who directs the trustee, if the trustee is directed) on what the paper trail indicates, or on the lack of a paper trail, and otherwise to maintain a careful professional distance from the fiduciary's decision. In the event of a DOL investigation, I am sure they would say tie goes to the plan. But again, there's probably evidence one way or the other if you dig hard enough.

Jakyasar, right. See Temp. Reg. 1.414(q)-1T, Q&As-11 amd -12.

A 127 plan has to be provided by an employer. Has no account, no investments, must be funded by employer. Totally different animal from a 529 or ESA. Has its own set of nondiscrimination-type rules.

I think it's pretty simple. You need to ask whether they are going to (or should) treat the 5% as self-employment income under IRC sec. 1402, which determines whether it's subject to SECA. If yes, then check the plan document, which will probably say that a person with SECA (a self-employed person or individual (SEI)) is covered and their 1402 self-employment income is their compensation for plan purposes. Whether what the individual earns is self-employment income will depend in part on the type of partnership (general, limited, LLC taxable as partnership) and the terms of the partnership agreement.

It can be the amount necessary to cover taxes, but can't exceed the amount of Federal, State, local, and foreign taxes required to be withheld in connection with vesting. Treas. Reg. 1.409A-3(j)(4)(iv). EBECatty raises some very good points, but the design does make it look a lot more like a retirement plan, e.g. if the plan provides for a 10- or 15-year payout, in approximately level amounts, following separation from service. Income tax on all the earnings is deferred, no more FICA is owed, and most of the payments (e.g., over the 10- or 15-year period) are tax-free recovery of basis. For a senior executive and board who want a real retirement benefit, it's a good design. The biggest issue is the creditworthiness of the 501(c)(3), so makes the most sense for a well-established employer. And finally, explaining how it works makes for an interesting PowerPoint presentation, if you're into that.

If his birthdate is October 1, 1961, say, then his social security full retirement age is 67. There is a 5/9ths of 1% reduction for each of the first (or last, depending on how you want to look at it) 36 months that you claim your benefit before full retirement age. And a 5/12ths of 1% reduction for up to 24 more months (67 being the oldest retirement age). So here, the individual would have a 30% reduction in his regular retirement benefit (36 * 5/9ths + 24 * 5/12ths). For someone in good health, it may make sense to wait, even to age 70, where this individual would get a 24% enhancement over the age 67 benefit (8% for each year). But for someone who may have a reduced life expectancy or other compelling reasons to take early, you may be leaving cash on the table, e.g. here, assuming out of thin air a $30,000 annual benefit at full retirement age, you'd be forgoing receiving $105,000 between ages 62 and 67 (5 * .7*$30,000). But then if you lived a long life, beginning at age 67 you'd be missing out on $9,000 a year for the rest of your life ($30,000 - $21,000). So it's worth thinking about. Note that if someone continues to work and earns substantial earnings between the age at which they claim (here, 62) and full retirement age (FRA), then they will have to pay back some of their benefits anyway, so it may not make sense to claim early in that situation. The calculations are explained on the social security website, and you can establish and account and do some what if modeling related to your benefit at certain ages and under certain pre-FRA earnings conditions. However, if you do have substantial earnings and SSA takes some of your benefit back, they add it back to your benefit later when you do reach FRA, as if you had waited to receive that amount. Once you reach FRA, you can earn as much as you want and your benefit is unaffected. The spousal benefit is unaffected by any of this. But precisely because the spousal benefit is unaffected, if the individual really believes he has a shortened life expectancy, and will not have substantial earnings (as computed by SSA, so again check the website) the general advice is to take as early as you can, because once you pass, your own benefit just stops, and therefore you may be leaving money on the table.

justanotheradmin, the audit requirement is determined at the adopting employer level, looking at its participants. If all the MEPs employers satisfy certain conditions, the MEP files a single 5500. But the audit requirement is separate and applies to each adopting employer.