C. B. Zeller

Your taxes will be higher with the loan, but solely because you invested a portion of your account in an investment with a higher rate of return which resulted in your having a larger benefit at the end of the year - not because of anything intrinsic to the nature of the investment as a loan.

Not even the interest is double taxed. Let's say on 12/31/2019 your account balance is $50,000. During 2020 your account experiences a rate of return of 5% and there are no contributions. Your balance on 12/31/2020 is $52,500 and you immediately take a distribution. Your taxable salary for 2020 is $100,000 so your total taxable income for 2020 is $152,500. Now let's say you take a loan on 12/31/2019 for $10,000 at 5% interest, payable as single installment in 1 year (ignoring the quarterly requirement for simplicity). On 12/31/2020 your account is $42,000, plus you make your single loan repayment of $10,500, then take your distribution of $52,500. Once again your taxable income for 2020 is $152,500 - exactly the same as without the loan. If the interest portion of the loan repayment were pre-tax, then the taxable salary would have been only $99,500 and the total taxable income would be only $152,000 - less than without the loan.

Why are you rolling over the small balances instead of cashing them out? Balances under $200 do not even need to be provided with the special tax notice.

No, participants are not double taxed on loans. I'd be happy to prove it mathematically if you like. Even though loan repayments are made with after-tax money, the loan withdrawal, unlike a plan distribution, is not taxed.

There is something called a Qualified Separate Line of Business which would allow you to disaggregate the plans and test them individually, but each QSLOB must have at least 50 employees (plus other requirements) so that is not going to help you here since B has only 20 employees. If each plan satisfies minimum coverage separately, then you are good.

AAA code of conduct (which is incorporated by reference in the ARA code of conduct), Annotation 10-5:

Refinancing involves replacing the original loan with a new loan - usually to get a new interest rate or add additional funds. Re-amortizing an existing loan without adding additional funds and at the loan's original interest rate in order to keep it in compliance does not, in my opinion, constitute refinancing.

You didn't mention ownership percentages - but I'm going to assume that we're dealing with an ASG between the partnership and the two corps. 1. The compensation that is paid to the two dentists for their personal services is the W-2 income from their respective S-corps - so that is their plan comp. 2. If the correct compensation had been used in past years, would the plan have satisfied all applicable requirements, e.g. 401(a)(4)? If so then no correction is needed. Most likely you are fine, since you were probably using a lower number than their true comp for past years, and having higher HCE comp would typically help testing.

It sounds like this is a regular occurrence, and from your description the employer knows it is a problem. It also sounds like the employer has not taken any steps to remedy the underlying problem since they are aware of it and allow it to continue happening. In order to be eligible to use SCP, a plan administrator "must have established practices and procedures (formal or informal) reasonably designed to promote and facilitate overall compliance in form and operation" (Rev Proc 2019-19 4.04). I think they might not meet that requirement.

The IRS takes no position on it - the bond requirement comes from Title I of ERISA which is under the purview of the DOL. A plan which covers only an owner and their spouse is exempt from Title I and thereby bonding requirement. A plan which covers only an owner and their mother does not fall under this exemption and therefore is subject to Title I and everything that comes with it, including the bonding requirement.

That is still the definition of "standard interest rate" in 1.401(a)(4)-12

The recipient's mailbox may be full (or close to full) and the added size of the attachment could cause the message not to be received. PDF files are a common vector for transmission of malware and viruses. If the sender's PC is infected, they could be unwittingly transmitting the infection to the recipient. These both seem like very remote possibilities. The size of a properly created PDF is usually not more than a few dozen KB, and the second threat can be reasonably mitigated with appropriate security measures.

You are correct that the 25% limit applies alone to the DC plan when the DB plan is covered by the PBGC. The DB plan is still subject to its own limit, so they can can only do "as much as they want" to the extent they do not want to do more than permitted under 404(o). Assuming the DC plan is a profit sharing plan, they of course have to have some profit left over after the DB contribution in order to make a contribution to the DC plan. If they do, they can contribute up to 25%.

This comes the safe harbor of 414(n)(5). What it is saying is that, if the leased employee is covered by the leasing org's MPP (which meets the requirements given), then you do not have to treat them as as leased employee of the recipient org (your client), but solely as an employee of the leasing org. In other words you can disregard them for plan purposes. I've never asked a client about it because it seems unlikely (to put it mildly) that a leasing org would sponsor such a plan.

20% withholding is mandatory on eligible rollover distributions. 3405(c) A hardship withdrawal is not an eligible rollover distribution. 402(c)(4)(C)

The regulations are explicit that an HCE's excess contributions are included in the ADP test. See 1.401(k)-2(a)(4)(iii)

The ADP test includes 402(g) excesses for HCEs. So, you will calculate the amount of his refund including the entire 402(g) excess. Any additional excess that remains in his account after the ADP refund is distributed is irrelevant, since 402(g) excess can not be corrected after 4/15.

If they have the right to direct investments, then I think they should be receiving quarterly notices.

What about the quarterly notice informing participants of their right to direct investments? edit: We call it the "PPA Notice" around our office but I feel like that name is pretty outdated at this point. What does everyone else call it? "ERISA 105(a)(1)(A)(i) Notice" doesn't have the same ring to it.

May not be eligible to use average benefits test - if the excluded HCE is excluded by name it would not be a reasonable classification.

If the plan is terminating, then just make sure all the distributions including deemed/offset loans are (or have previously been) reported and taxed properly. Repaying amounts to the plan, adopting retroactive amendments, etc. as described in EPCRS not worth it in that situation.

3-year cliff only. 411(a)(13)(B)

Apologies if I created any confusion. The source I was referencing said that an ASG can exist if there is an ownership interest in the FSO by an A-org or HCEs of an A-org, and upon further review I do not believe that is correct. For a B-org group however, the B-org needs to be 10% owned by the FSO or HCEs of the FSO or its A-orgs. So there might be a B-org group if the CPAs are common law employees of the firm, since then their pay would be counted for HCE determination purposes.

I've updated my previous post (and will be sending an email to the authors of the study guide for the CPC Related Groups module). If they are determined not to be common law employees of the firm, but rather to be common law employees of their own LLCs who are working under the primary direction or control of the firm, then it is possible that a leased employee situation exists. While not exactly on point, Derrin Watson does address the question of whether one could simultaneously be an independent contractor and a leased employee in ch.5 of Who's the Employer. This situation is a little different since the entities in question are single-member LLCs and not sole proprietorships.

We use PensionPro and most of our clients manage to submit their annual data collection and other sensitive through it with no trouble. Gmail has confidential mode which helps with sending sensitive data if you are on G Suite, receiving not so much. I have one client who has added me to their Dropbox and uses that to send me files. Worst case, I will tell clients to password protect their Excel file and send it over regular email. It's not perfect, but better than nothing.