AbsolutelyOkayPossibly

Assume that there is no IRC 72(p) statute. Just the labor statute. But then assume that even though the fiduciary is prohibited from issuing a loan that is not bonafide, one was issued anyway. (A) is there a loan? (B) if there is a loan does the fiduciary have the authority to unwind the loan unilaterally?

I respectfully disagree that the regulations do that much heavy lifting. The IRC 72(p) regulations only state that the examples in the regulations are based on the assumption that a participant loan is made with adequate security and with an interest rate and repayment terms that are commercially reasonable. The IRC 72(p) regulations do not explicitly state that only loans that comply with the terms of IRC 4975 are qualified to meet the exception to avoid being a distribution. Thus the question is rather, what is the definition of a loan in the statute? Is a loan only those devices that comply with IRC 4975(d)(1)(D) or does it include loans that don't comply with IRC 4975(d)(1)(D). If IRC 72(p) includes loans that don't comply with IRC 4975(d)(1)(D), then as long as all the exceptions of IRC 72(p) are met, the loan is not a distribution, even though it might be a qualification error and a prohibited transaction. I do not read the regulations as saying that the IRC 72(p) exception is limited to bona fide loans "with adequate security and with an interest rate and repayment terms that are commercially reasonable."

We agree that there is a problem. And we also agree that all the terms of the loan are assumed to be reasonable for the examples in the regulations. But how does an unreasonable rate of interest result in a violation IRC 72(p)? Unless you are saying that such a situation will deem the loan before 72(p) is even considered.

Too low.

If a loan is issued with a commercially unreasonable rate of interest. How is this a violation IRC 72(p) that would provide for the authority to deem the loan. If your answer is it results in a violation of substantially level amortization, please provide your reasoning bc I’m personally struggling to reach that conclusion.

Has anyone caught wind of when the IRS might release an updated EPCRS aside from the absolute last day they are charged with releasing it from SECURE 2.0? Asking for a friend.

In my experience service providers offering a mix of 3(16) and 3(21)/402(a) services include the provisions more so than non-fiduciary service providers.

It's that point I'm finding myself confused on, only the management company is sponsoring the plan. The DOL recognizes an employee based on common law principles so how can one argue that those employees are not common law employees of the management company? Even the EOB seems to suggest there is such a thing as a shared employee relationship. The 414(o) statute used to have proposed regulations dealing with shared employees. If someone can show me anything where the employees are not employees of the management company and thus should be a multiple employer plan I would be greatly appreciative.

Its more like a rental property manager who manages apartment complexes for different businesses. The property manager hires and fires, controls where the employees work and what they do, but the employees are issued W2s from the business entities that are being managed.

I have an employer who states they have joint employer status with their employees, but almost all the employees are directly employed by other entities. No controlled group exists between the entities, but they are claiming a controlled group isn't necessary for these employees to participate in their plan. Has anyone encountered such a scenario? How do you set up the plan document this way when it seems like the IRS and DOL conflict?

If a plan distributed assets to a participant that wasn't 100% vested in a situation that wasn't a distributable event, is anyone on the hook for paying back the plan? They way I'm reading EPCRS, it seems that if the employee was still employed when it happened, no corrective contribution would need to be made to the plan. What if 6 months later this employee terminated? Would that trigger a repayment of the forfeited amounts if the employee never paid the plan back?

Actually, I see what Peter is saying and I don’t think he is necessarily agreeing with you purple. A careful reading may indeed yield several answers. I am curious about Former’s guidance though. Interesting question.

I thought only Simple IRAs had the 25% penalty. Not Simple 401(k)s.

Enrollment forms are often plan specific. If a spinoff plan is created should new enrollment forms be obtained from all employees because the regulations say so or is this more a policy decision that can be established by the plan fiduciary?

A plan has filed their 5500 for the last 8 years using 001, but their plan document has always listed 101 as the plan number. Would the world stop revolving and life cease to exist if we simply retroactively changed the plan number to reflect what was submitted on the 5500? I should also add that this is a large plan filer. Thanks!

Lets say there are two controlled groups. Controlled group 1 contains employers A, B and C, and controlled group 2 contains D, E and F. In addition, employers B and E are an affiliated service group. Both controlled groups sponsor a retirement plan with each of its controlled group members. The two plans provide for different benefit arrangements, controlled group 1 is a profit sharing only plan, and controlled group 2 provides only deferrals and matching contributions. I assume that when testing coverage for controlled group 1 would I need to consider employees of employer E in my analysis. If coverage fails without employer E for average benefits purposes, would I aggregate the entirety of both plans together or would I just include employer E employees into the controlled group 1's plan? I'm ignoring coverage testing of controlled group 2 because I'm assuming the same procedure applied to controlled group 1 would apply to controlled group 2.

I think I found the answer: 26 CFR § 1.415(c)-1 - Limitations for defined contribution plans. (B) Date of employer contributions. For purposes of this paragraph (b), employer contributions are not treated as credited to a participant's account for a particular limitation year unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) applicable to the taxable year with or within which the particular limitation year ends. If, however, contributions are made by an employer exempt from Federal income tax (including a governmental employer), the contributions must be made to the plan no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year (as applicable, depending on the basis on which the employer keeps its books) with or within which the particular limitation year ends. If contributions are made to a plan after the end of the period during which contributions can be made and treated as credited to a participant's account for a particular limitation year, allocations attributable to those contributions are treated as credited to the participant's account for the limitation year during which those contributions are made.

A foreign company sponsors a 401(k) plan for some of its employees who are US citizens living in a separate foreign country. 415 limit deadlines are based on when a company's US tax return is due correct? So how does one determine the deadline for non-safe harbor contributions if the company sponsoring the 401(k) doesn't have a US business tax return to file? I'm hoping to avoid looking through treaties. But it is 2020...