C. B. Zeller

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 edit: We call it the "PPA Notice" around our office but I feel like that name is pretty outdated at this point.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.

For B-org groups the proposed reg 1.414(m)-2(c)(1)(iii) says that the B-org must be owned at least 10% by members of the "designated group" which includes HCEs, officers, and common owners. I need to double check on the A-org specifics. I am reading contradictory information in two different sources. I'll update this post when I figure it out.

There are a lot of issues to consider in making an ASG determination. Who is the common law employer of the non-equity partners? How the report their income is not necessarily determinative for this purpose. If the CPA firm has primary direction or control over their work, then they may be considered common law employees of the firm even if the firm does not give them a W-2. If they are common law employees of the firm, then there is likely an ASG even though there is no common ownership, because the ASG rules require that the A-org or HCEs of the A-org must have ownership in the FSO (or, if treating the firm as the FSO and using the B-org rules, that the B-org be at least 10% owned by the FSO or HCEs of the FSO) - assuming of course that the individuals in question have compensation high enough to be considered HCEs, which it sounds like a "non-equity partner" probably would. Edit: HCE ownership does not apply for A-orgs

ESOP Guy, thanks for pointing that out. If we're talking about fictions in the qualified plan world, the most pervasive one is easily that your 401(k) account is "yours," since it is of course, legally an asset of the plan under the control of a trustee. Given that the trustee is obligated to use that asset solely to provide benefits to benefits to you or your beneficiary, it is expedient (not to mention good marketing) to refer to it as "yours," but there are definitely situations where the distinction becomes important.

fmsinc - all of the links you posted describe one way of accounting for participant loans. This is a common way to do it, especially on daily valuation platforms where each participant's account is segregated from all others in the plan, and they all choose their own investments. These platforms are very popular and account for the vast majority of 401(k) accounts in existence today which is probably why all of the articles assume that is how the reader's plan is set up. In a pooled plan however a participant loan can be treated like any other plan investment, and the earnings on that investment (in other words, the interest paid on the loan) are just part of the plan's overall earnings for the year, which would be allocated to each participant's account in accordance with the plan's procedures for allocating earnings, which may or may not allow for interest on participant loans to be credited back to the account of the person whose account balance is securing that loan. To the original question though, I wonder if the short period of time between the date of termination and re-hire has anything to do with it? If account only contains deferral contributions, the employer might not want to be in a position of distributing those contributions if the employee is under 59-1/2 and still employed at the time the loan is being offset. Jaclyn, the law allows (but employers are not required to provide) for a suspension of loan payments for up to 1 year during an unpaid leave of absence, with the missed payments during the unpaid leave to be made up upon return to work, or re-amortized over the term of the loan. I'm not sure if your situation fits this, but maybe they would allow you to make up just the payments that you missed while you were not working (with interest), and then resume payments on the original schedule?

You can make 1/1/19 an entry date for employees who completed 1,000 hours during the prior 12 month period, regardless of the fact that the company was not in existence for the entire 12 month period. You could also let all employees who were employed on 1/1/19 enter on 1/1/19 who are reasonably expected to complete 1,000 hours of service during a 12 month period.

Not sure I understand the question - does the plan have different match formulas for pre-tax and Roth deferrals? Generally the deferral percentage for purposes of calculating match would be (pre-tax + Roth)/comp.

My understanding is that if you are allocating to individual groups and testing using permitted disparity on allocation rates, the integration level for testing must be 100% of the TWB. Option C is to adopt two separate plans with different allocation formulas for the two groups of employees.

You can self-correct by retroactively amending to allow 3 loans. Rev. Proc. 2019-19 addresses this.

If both plans satisfy 410(b) separately (considering only the employees benefiting under that plan as compared to all the nonexcludable employees of the controlled group), then they do not need to be aggregated for nondiscrimination.

You should call the IRS auditor and explain the situation. They should be able to advise you how to proceed. You might need a letter from the sponsor stating that you prepared the Form 5500 for the year under inspection, but you should be able to represent the plan as an unenrolled return preparer.

A single-member LLC (or sole proprietorship) doesn't "issue" a schedule C, the schedule C is part of the member's (or sole proprietor's) 1040. So if this person had income from their company, and didn't file a schedule C, how are they reporting their income for tax purposes?

You're unlikely to be able to do that on a preapproved document. Also keep in mind that the availability of a rate of match is a benefit, right or feature which must be tested under 401(a)(4). Would both companies pass 410(b) if tested separately? If so, adopt separate plans for each.

1.401(a)(26)-7(c) and 1.401(a)(4)-11(g)

Were they formerly a 5% owner? If they were a 5% owner during 2016 (since that was the year they turned 70.5) then they have to continue taking RMDs, even if they later became a non-5% owner.

This is what the proposed hardship regs have to say on it, and as far as I know this is still the only official guidance on the matter: The changes to the hardship distribution rules made by BBA 2018 are effective for plan years beginning after December 31, 2018, and the proposed regulations provide that they generally would apply to distributions made in plan years beginning after December 31, 2018. However, the prohibition on suspending an employee's elective contributions and employee contributions as a condition of obtaining a hardship distribution may be applied as of the first day of the first plan year beginning after December 31, 2018, even if the distribution was made in the prior plan year. Thus, for example, a calendar-year plan that provides for hardship distributions under the pre-2019 safe harbor standards may be amended to provide that an employee who receives a hardship distribution in the second half of the 2018 plan year will be prohibited from making contributions only until January 1, 2019 (or may continue to provide that contributions will be suspended for the originally scheduled 6 months).

Does the plan document address this at all (e.g., a fail-safe provision)?

Yes, as long as the safe harbor notice states that the employer may amend the plan to reduce the match, and notice is provided at least 30 days in advance of the change. However the ADP test will be required for the year.