Basically

This problem has probably been answered. Today I learned that a plan participant terminated during the year and the financial advisor rolled out the balance to an IRA. Little did they realize that the participant is due a SH contribution in addition to a NEC employer contribution. Do they need to re-establish an investment account and roll the funds over or can the contributions be directly paid to the rollover IRA?

Correct, not an attorney. I would like to be able to put it to bed with an answer though. In CBs post there is bullet "C" (C) Not more than 50 percent of such organization's gross income for such taxable year was derived from royalties, rents, dividends, interest, and annuities; Since Betty's business income is derived 100% from performing work for Bob's businesses then I would venture to say there is ownership attribution making all 4 businesses a control group regardless of whether Bob was an employee of Betty's Enterprises. Am I onto something there? Appreciate your thoughts.

Ya Cuse... I always make the point that "I don't make the rules". I told them how it would need to be and they came back with.... If Bob was not a paid employee of Betty's Enterprises (had nothing to do with Betty's) can they separate Betty's Enterprises from the other 3? Can that eliminate the control group including Betty's? Does that work? I think it's obvious that what they want to do is load up Betty's with maximum deferrals and ER Contributions and not be on the hook to provide a large ER contribution for the employees of the other businesses. Also, the admin expense for a qualified plan for all 4 businesses combined is not something they want to pay for (cut me out of a day's pay) So... would removing Bob from Betty's Enterprises take Betty's out of the control group? Thanks

Thanks... that's what I told them. And... come to find out, Betty only works for the other 3 businesses. She could perform management services for unrelated businesses but technically makes all her $ from billing Bob's 3 businesses. I have led them to water.... unfortunately if it is not what they wanted to hear they think the water is poisoned and look for another watering hole. Ahh Zeller, thanks for that!

I have told these people that they have a controlled group. They keep balking at me. Just confirm for me so I know I am not going crazy... FACT: Bob and Betty are husband and wife Bob & Sons Excavating Bob is sole owner. Bob's Pipe & Supply Bob is sole owner Bob & Sons Gravel Bob is sole owner Betty's Enterprises Betty (Bob's wife) is sole owner, sole proprietor. Bob receives W-2 Betty's Enterprises performs management services for all of Bob's businesses Because Betty's Enterprises earns money off of Bob's businesses we must include all 4 businesses ... correct? Attribution? Bob wants to setup a Simple IRA because he thinks it would be cheaper than a 401(k) (because his businesses have employees). Bob and betty want to setup a 401(k) for Betty's Enterprises because it is just the 2 of them... no rank and file employees. Thoughts? Thanks

Actually... that is what is happening. The plan is terminating and the loan would be offset. The participant wants to roll what cash they have into an IRA but doesn't want to take the loan offset as a defaulted loan subject to the 10% tax. How would we show the loan balance as a COVID dist? Simply call it a COVID distribution? No mention of the loan offset?

A plan participant asked me if they could cancel their plan loan because they were finding it hard to make the payments. I wonder if the loan balance could be considered a distribution... a COVID distribution not subject to the 10% excise tax. Thoughts? Note: this participant does qualify for the COVID Dist... works for a dentist and has not worked for months at this point.

I get that when a plan terminates unless a loan is paid back prior to distribution it is offset. Can the participant pay back the loan after distribution? For instance, deposit the outstanding loan balance into their IRA within 60 days? Thanks

Perfect... thanks for confirming my thoughts

If a plan is terminating and the termination is not related to the COVID virus will those who take a cash lump sum be subject to the 10% early dist excise tax? I would think they are subject to the tax because the payout was not instigated as a COVID distribution. AND... should we offer a COVID distribution option anyway?

a quick followup.... is there a cite to hang my hat on? Appreciate it.

A man of few words. NO... it's not the same in qualified retirement plans... and YES .. he can keep them in his safe deposit box. Thanks

A single member plan participant would like to invest in Gold. In an IRA the rule is that the gold must be held by a custodian. Is that the same for qualified retirement plans? Is this single member "solo" plan participant allowed to invest in say Canadian Maple Leafs and keep them in his safe deposit box? Thanks

Ok... 8822-B completion question... I assume I only complete the following for a responsible party change? #2 regarding "Employee plan returns #8 New Responsible Party's name (new business officer) #9 New responsible Party's EIN #10 Officer signs Thanks

Yup! Thanks for all the help. I have never run into this scenario. Never had a business sell. Plan sponsors die but that is just a termination.

Thanks for that ! No SH contribution issues... as a matter of fact they received like $1200 too much and they returned it already. question... The plan had it's own EIN.... Do we need to apply for a new plan EIN because the old owner (Bob's) was affiliated to that EIN and now Bob's is gone?

What they want is for the plan to continue on as if nothing happened. So let me get this straight... Bob's Dental sells to Sue's Dental... asset sale Sue's Dental can simply take over Bob's Dental 401(k)? -> simply amend the plan by changing the plan sponsor? Changing the trustees? Case closed? -> in the above scenario the participants don't have a choice.... plan just continues on as Sue's Dental wants? If so then I am guilty of overthinking the whole case.

Here are the simple facts: -> Dental Practice is sold - asset sale - all employees stay at their positions -> New owners take over the plan to keep a status quo ... so the employees can continue to defer and receive the SH match The new owners adopted a new plan which is a mirror of the existing plan. All employees are given credit for their service with previous company. They want to merge the old plan with the new plan. Q - Do we need to, are we required to give the participants the option to take their money? Take a distribution? (or of course roll their accounts to the new plan) Thanks

Just heard back from the CPA. Indeed it was an asset sale. So my question now is... Can the entity that purchased the business continue to maintain the plan as it exists? If so, what steps should we take? Appreciate the help.

The new owners paid cash and took over the name, clients... everything. That would be a stock sale... agreed?

A dental practice was sold and the new doctors who purchased the practice took over payroll. I was not made aware of the sale until after it was finalized . As a result deferrals were not withheld or paid in. Employees paychecks were bigger as a result and no one spoke up. Is there a cure? Instead of making everything right with one correction to an employee's next paycheck, can the missed deferrals be spread out over a few paychecks? Thanks

It has been 1 year almost to the day. Re-calculating the loan so that it is paid off on time ... is that an acceptable solution? I struggle with this whole debacle because it is not the participant's fault. I mean, the payroll administrator dropped the ball by not starting the deduction.

No... not just a few. We are talking months. I should have mentioned that in the original post.

A participant took a loan from the plan and the payment was supposed to be withheld from their payroll. The payment was not. Besides getting the deduction going so that the loan is paid back, what is the remedy for the lost time... missing payments?

Thanks... that is how I understood the rule. A owner could have one employee who works less than 1,000 hours. If the plan requires 1,000 hours to be eligible then that employee is not eligible.... and the plan with only the owner as a participant would be EZ eligible. Sometimes I think too much