Basically

From the form 5500 instructions the IRS writes this: A “one-participant plan” is: (1) a pension benefit plan that covers only an individual or an individual and his or her spouse who wholly own a trade or business, whether incorporated or unincorporated; (2) or a pension benefit plan for a partnership that covers only the partners or the partners and the partners’ spouses. Thus, a “one-participant plan” can cover more than one participant. On the other hand, merely covering only one participant does not make you eligible to file as a “one-participant plan” unless you are one of the types of plans described above. A CPA is saying that his client who has 1 employee who works 10 hours a week and does not meet the 1,000 hour requirement would still be eligible to file a form 5500EZ. Based on the above that would not be the case. Simple answer.. EZ eligible or not?

Does everyone who is not from MA assume that people who live here are horrible? Because we aren't . No Rollover money... just a guy who doesn't want to participate in the plan anymore so he wants to take his money. He can't and I told him that. Of course with the internet when people don't receive the answer they like they start "Google-ing". He must have found something and pulled a few snippets from his find that he thought backed up his case so he questioned my answer. For a quick confirmation of my knowledge I posted the question to see if there was anything I missed. That's it. Thanks to all!

Situation is this.... An employee who is a participant in the plan (SH Match 401(k) ) simply doesn't want to play anymore. He wants to take his money and invest it somewhere else... away from the plan. There is not a distributable event... not 59-1/2... not disabled... nothing. The employee is out of luck... correct? Money has to stay put.

I can see how some businesses may cross, regardless of how different they may be. And I will advise this guy that he for sure is a control group of companies.

I knew the answer ... am I alone thinking this is unfair? I mean his 2 businesses have absolutely nothing in common except ownership.

I hate the control group issue. I don't agree that a guy, who has 2 totally separate businesses in every way, must include both companies in coverage and testing. That said I just need confirmation that there is nothing I am missing. Guy is a financial advisor... independent RIA He also has a real estate business 100% owner of both Control group... yes? Thanks

Thanks Bird... No, did not prepare a 945-A but it sounds like maybe we should to argue that the payments were not late. As for those dates, I was told that the payments were both instigated on the same day but cleared on those specific dates. An internal payment is quick... a payment that flows through EFTPS took a few days. Im going to do more research. Thanks again

The IRS is... well... dealing with this I became very frustrated. I spoke to 4 different people and got many different answers. One agent told me I was all good! Another told me that my client was on a daily schedule... that the taxes needed to be in by the very next day. Sheesh! Who knows the answer definitively! But what frustrated me the most is that the client would pull the distribution and at the very same time pay the taxes using his EFTPS account and yet the IRS said he is still late. Im still looking into this... something is not right.

The instructions of 945 do point to Pub 15 section 11. Reading and trying to understand. I spoke to an agent who did tell me that they have this plan in their system as a semiweekly8 depositor. Im reading and will circle back

to the plan.... "charges to your December 31, 2017 945"

I get that a business may be on a schedule but a participant of a plan who takes distributions during the year is supposed to make periodic tax payments? How would he know how much to pay? Regarding how quick did he make the tax deposits here is an example... he took a $23,000 payout... $15,000 to him on 1/13 $8,000 to the IRS on 1/17 During the year he took $373K in total payouts. He paid in from that taxes totaling $124K. What about all the plan participants who take RMDs? Are they supposed to make tax payments monthly?

Did I miss the memo? I have a client who has for a few years been taking distributions from his single member plan. He is older than 59-1/2 (70-1/2 this year as a matter of fact) so there is not premature distribution issue. We pay the taxes on all distributions in excess of the 20% minimum (33%)... prepare the 1099-R and 945. Uncle Sam sent him a penalty letter telling him that his tax payments are late! That he is on a tax payment "schedule"? Ok.. how can he be on a "schedule" if he doesn't know when he will take a distribution? And.. when he does take a payout he immediately pays the taxes... using the EFTPS system. Like I said.. did I miss the memo?

I have an attorney who has continually asked if it is acceptable to co-mingle ROTH contributions with regular salary deferrals in a single investment account. I informed him that it is acceptable as long as you keep each source separated when performing the annual accounting meaning... as long as you allocate earnings proportionately. Does anyone have an IRS cite saying that is an acceptable practice? That is what he is looking for. Thanks

A is a W-2 employee... sorry for the slow response.

A & B are not married. No attribution there. A does pay income taxes on his pay from the publishing company. Affiliated Service Groups. ... confusing. Can anyone help me put the players in place? Publishing Co owned 50/50 (FSO?) Graphic Design Co owned 100% by B (A-Org because B owns a share of the FSO) Does the fact that the Graphic Design Co performs work for the publishing company automatically make this an ASG? The Graphic Design Co has many clients and does not by any means earn a majority of it's income from the publishing company. I have read that if the percentage of income is 5% or less then an ASG does not exist. Thoughts?

So the fact that Employee/Owner A owns 0% of Employee/Owner B's graphic company means that this is not control group. Because Employee/Owner A has a 0% interest in the graphic design company means we do not include him in the Control Group test. That leaves Employee/Owner B and his ownership percentage of both companies to determine if a control group exists. AND.. the fact that he is only a 50% owner of the publishing company means that there is NOT a control group because it is less than 80% So I figured that out myself... BUT.. I wonder.. is this an Affiliated Service Group (ASG)? The graphic design company does work for the publishing company. It does not solely rely on the publishing company but it does do some work and considers the publishing company it's client. ASG thoughts?

I pretty sure an LLC.... Im verifying

There is a small publisher ... 2 employees.. both owners... 50/50... Setup a Solo 401(k) Employee A invested $100K in startup costs Employee B investing sweat equity Employee B is the graphic designer and owns a separate graphic design business. This business does have rank and file employees. No plan Employee B does not earn any compensation from the publisher company. Employee A does and makes a salary deferral contribution from his publishing compensation. Both employees receive a K-1 from the publishing company... no SE income declared on these K-1s Is this a control group? Does the graphic design company need to be included and allow their EEs to participate? Thanks

That is a very good point and I would suggest that first. I am not the TPA, just a resource for the CPA to bounce this question off of. There could be a simple explanation for the missing money. I certainly would not want to be the one to sic the DOL on my employer if in fact there is a simple explanation to the problem. Thanks for that!

I was going to make the post's headline "plan sponsor stealing participant deferrals". I mean that is what they are doing! I did suggest the participant top deferring immediately.... DUH I also told the CPA that the DOL is the watchdog when it comes to pensions and participant rights. i guess he needs to confront the company and get the ball rolling to recover his own money. I will suggest that he reach out to the DOL and even the TPA. I don't know who the TPA is but I hope they make it clear to the company that what is happening is illegal and they are risking more than they know. Thanks

Im horrible at searching and finding previous posts on a subject. Forgive me if this has been answered before... A CPA I work with asked me what should be done... here is the situation - His client works for a small company and has been deferring from his paycheck. He was on track to defer around $13K for 2017. After looking at his account he became concerned that the deferral deposits are not adding up. Significant discrepancy. Come to find out the deferrals have been withheld BUT they were not being deposited. In fact the company was using his (and maybe other participants) deferrals to cover some cash flow problems. Not good. I have never had this kind of problem. What do people suggest the proper steps he should take? Thanks

Thanks for your opinion and insight. I will impress upon the trustees that they need to take an interest in who is chosen, vet the potential advisor in an effort to protect the participant from being mishandled financially.

@RatherBeGolfing... That is correct. We just want to make sure that we are not forcing anyone to use XYZ since the owner has decided to use his own guy at ABC. My concern and goal is to present each participant (owner included) a form explaining that unless they have a better choice the default brokerage house will be XYZ and Joe Cool will be the financial advisor. As is stands now only one of the rank and file employees is considering a move... everyone else is thinks Joe is cool and will continue to use him. So to summarize your procedure... you just include a simple notice telling the participant that the option is available and if they want to check it out they should request more info. That is when you spring on them the procedures and more paperwork? Thanks

Each participant has a segregated brokerage account. Salary deferrals and the SH contributions are deposited into each participant's account monthly. The financial advisor appears on their doorstep twice a year to sit with each participant and discuss their account. He is also available in between visits as needed. Because the owner has personal funds also invested with the boutique advisor I am sure he meets at least semi-annually. Each account currently is registered to the plan FBO each participant. The trustees are listed on each account. Should any participant decide to move to a different investment firm the same setup would be put in place. I asked him if maybe the boutique would make an exception considering most of the rank and file accounts are valued anywhere from $50k ~ $150K. It's not like we are talking insignificant account balances. I am sure there are plans that are setup this way.... giving the participant's the option to choose where their account is invested.

I have searched the web and this site but can not find an example of a notice you would give to the participants of a plan informing them that they can establish an individual brokerage account away from the current financial advisor where their funds are being held. Here is why I am looking for examples..... A new plan to me... currently the plan has say 15 participants and all the participants have individual accounts at a legacy investment firm. The owner has a substantial balance ($700K) and his account is being managed by a money manager at a smaller boutique investment firm. The other participants do not have the minimums to open accounts at this boutique firm so their accounts are managed at the larger legacy investment firm. Doesn't seem fair to me... why does the owner get to choose a different investment firm while everyone else is stuck at the legacy firm? As you can guess, the owner doesn't want to give up his boutique firm so he wants to make it available to the other participants the option for them to choose where and who their account is invested. Does anyone have a boilerplate form that I can include as an addendum to the SPD as well as include at the end of the participant statement/SAR package given upon completion of the annual administration? Thanks!