Purplemandinga

The plan will be terminated, the purchaser sponsors their own 401(k) (non-money purchase) plan. Employees will transfer to new employer due to purchase.

So, if the 402(f) notices were drafted in such a way, then such an occurrence is feasible. Let me add one more wrinkle, the plan requires spousal consent due to it being a money purchase. Would obtaining spousal consent block such an effort if terminated participants (who may or may not be married) didn't respond or could those amounts still be forced to rollover to the other plan?

Has anyone heard of forced rollovers for all participants from one employer to another if the employers were unrelated but there was an asset purchase involved? Again, not a transfer, but a mass rollover.

I believe it is a grantor trust. I apologize for not providing enough information. Working with trusts outside of the plan's trust is new for me.

If the trust holds the ownership would the K-1 be issued to the individual? Is that typical? I thought it would be issued to the entity that held the ownership.

Assume its taxed as a partnership via a 1065.

Okay excellent, so the Plan doesn't have to directly recognize the trust in order for the income to be included as plan income. I took a quick look in 415 to see if I could find my answer and I couldn't find it.

Is it optional for a Multiemployer plan to change into a Multiple Employer Plan arrangement as long as all the parties agree to such a thing occurring? Or is a plan locked into a Multi for life? Alternatively, if the CBA parties agree, could all the employers transfer assets to a MEP who is sponsored by a PEO and terminate the Multi?

An owner of an LLC has his interest of the company sponsoring a plan held in trust, would the owner be able to use the income earned by the interest to participate in the plan? Is this even an issue?

Thanks everyone for taking the time to respond. I still haven't found the guidance that was suggested exists here. Could anyone clue me in to where I could search for something as specific as this? Sorry to be a pain.

Peter, I've read section 2510.3-55 and my concern was that "Employer Member" ≠ "Employer". I think you and I may have been thinking the same thing. Former, do you know where I might be able to find the guidance you speak of?

An Association MEP exists of businesses that operate stores of a certain retailer. These stores sell products. One of its participating employers is in a controlled group with a business that cleans pools as a service but is not a member of the retail association that sponsors the MEP and couldn't be a member based on the association bylaws. Would the fact that a controlled group exists and the plan document automatically pulls in related group members allow this pool cleaning business to participate in the MEP that it otherwise wouldn't be eligible to participate in? Is anything violated by allowing this?

HA, I can't argue with that.

I agree, 100%. That is the reasoning behind each employee is their own group not having the option. But is including the option to distinguish between (%, $ or highest of the two) per group a requirement to be included in plan document when the option is not new comp - each employee is own group in order to be definitely determinable?

So, a profit sharing plan needs to define a "Contribution Formula" and an "Allocation Formula" in order for the plan's contribution to be definitely determinable. In many plan documents when you select a new comparability - each employee is own group formula, no additional "method" on how to allocate the contribution formula is required. For example, no additional input is required to establish if each group will receive a flat dollar, % or the greater of the two. However, its different when we select new comparability - groups, documents tend to make you establish in the plan document whether the contribution formula will be allocated via flat dollar, % or the greater of the two. I can reason why this may not be required for new comp - each employee is own group. But my question is this, is it actually required that the plan document define in new comp - groups that each group will be allocated the contribution based on flat dollar, % of comp or the greater of the two? Couldn't that simply be provided in writing to the plan administrator to satisfy the definitely determinable requirement?

This is what I was thinking initially. If there was no plan, then how can deferrals be held?

The sponsor is holding the money as there is no trust to deposit the funds. I assume you are suggesting these would be considered late contributions as far as lost earnings go? Is there another option than just hanging on the the money if not retirement trust is available?

Here is my situation. A sponsor left a PEO but hasn't yet established a single employer plan to accept money from the previous plan. During this time the sponsor continued withholding deferrals from paychecks based on deferral elections related to the PEO. Would a new single employer plan be able to accept these deferral contributions if new enrollment forms with deferral elections and investment choices hadn't yet been completed???

Ha! But to answer your question, yes, I think you could use daily testing, but I would read the examples in the regs closely to see if it provides the relief you are looking for.

I think I would rather have Covid than do daily testing on any regular basis.

Luke, I'm not entirely certain of the reasoning, but I agree I think its better to just allow the distributions until year end. Larry, your experience is similar to our book of business.

If an employer allows participants to take a Cares Act distribution during early 2020, but say later in October of 2020 decides to no longer allow them would this be a violation of protected benefits? My reasoning stems from participants who were previously allowed to take a distribution due to a particular event are no longer able to do so through the current statutory period that allows such a distribution to take place.

If a plan document requires terminated participants wait 1 year before they take a distribution, would implementing the Cares Act in the plan require the plan document to be amended to shorten the time terminated participants have to wait in order to get their money sooner than 1 year? EDIT: I just wanted to clarify that the participant was terminated because of Covid, so they would be a qualified individual.

Wow that makes sense, I suppose I didn't read the example closely enough. Thank you for your help, I think you nailed it.

A client we had established a plan in 2018. Here are the relevant plan provisions: 1) Plan effective date: 1/1/2018 2) Plan does not exclude comp prior to participant entering plan 3) Eligibility for profit sharing contributions was Age 21, 1000 hours in a 12 month period, entry each 1/1 and 7/1 4) To receive a profit sharing allocation a participant must be employed on the last day of the plan year 5) Method to correct coverage failures for nonelectives is to "Add Just Enough" 6) Profit Sharing formula was discretionary, "New Comp - One Group per Participant" 7) There is no one year hold out rule for eligibility or vesting 8] There is no 5 year rule of parity rule for eligibility or vesting The client gave us a census with 14 individuals who were employed at some point during 2018. There were 3 eligible HCEs (1 of which was not an owner), and 4 eligible NHCEs. Before the end of the year the sponsor terminated employment of all eligible NHCEs. The termination wasn't nefarious, a large project ended and no longer needed these employees. The owners, of which there were 2 gave themselves each a 30k profit share on 12/31 of that year. There were no other contributions. Using the annual coverage testing method the plan fails coverage and requires pulling back into the allocation several employees who had terminated (because of the employed on the last day rule). General testing required that those employees collectively receive an additional 42k in allocations to pass nondiscrimination. The partial plan termination didn't help the situation either. If the plan uses the daily testing method for coverage on the last day of the plan year when the allocation was made, it passes coverage because there were no eligible NHCEs on the last day. Because of this there is no nondiscrimination issues. Is this allowable or am I missing something?