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I think this is correct, but as a sanity check since it seems harder than expect to find authority on this - if a 401(k) plan is frozen, it's still permissible for participants to take out new loans and hardship withdrawals, correct?

We have a client that has an LLC where the employees are paid and each of the three partners have their own s-corp. The LLC and two partner's have a simple plan. The other partner wants to have his own 401(k) plan. Each partner is a 33% owner of the LLC. Can the one partner have his own 401(k) plan?

Three companies A, B, and C. Company A is a Plan Sponsor of a 401(k) plan. Companies B and C are participating employers. Company C is an LLC taxed as a partnership. Employee is a 20% owner of Company C (Limited partner or other LLC member). No compensation on line 14 A of Schedule K-1. He receives a W-2 from company B. Would Employee be considered a highly compensated employee in the 401(k) plan for discrimination testing?

I just acquired a calendar year 401(k) Plan whose Plan Sponsor is an LLC electing to be taxed as a partnership. During 2014, there were two partners, along with staff, in the plan, one of whom (a long time participant in the plan) terminated his employment and partnership interests in June, 2014. For 2014 and before, there were losses in the partnership. It is my understanding that when the earned income of a partner, which is composed of the partnership distributive share of earnings plus guaranteed payments, is negative, the partners cannot defer any amount into the plan nor receive any employer contributions. In this plan, only salary deferrals and a Safe Harbor match have ever been made. Here's the problem: it appears that for years, the income being used for the partners was only their guaranteed payments which was given to them on W-2's. At this point, I don't know if the guaranteed payments were included on their K-1's. For the plan point of view: 1. If the net partnership income is negative, the partners should not have deferred anything and, in turn, should not have received an employer match. 2. If this is the case, the company over-contributed and over-deducted these contributions to the plan. I believe, that this should require a resubmission of the partnership returns for the affected years as well as the personal tax returns for the partners involved. Am I correct on this? 3. To make matters worse, the partner that left in 2014 had most likely made his salary deferral and received matches for some time incorrectly and received his account balance from the plan during 2014. This is obviously a mess. I will be meeting with the CPA and the client next week. The CPA has already dismissed these problems as minor and as "no big deal." As I see it, the plan has operational and/or qualification problems, over-deduction problems, distribution problems, etc., etc. and etc. I am looking for some insights into: 1. Whether or not there might be other concerns that I haven't touched on and 2. how to go about repairing these problems, i.e., EPCRS. Thanks, in advance, for any help.

I've got a question on the maximum percentage amount of the paycheck that can be allocated to contributing to a 401(k) plan. I was told by my company's accountant that not more than 75% of my paycheck can be allocated to my 401(k) plan (managed by Fidelity Investments). My question is: is there a federal law on such a limitation -- or this is just a company-invented rule? If this is just a rule, have anybody heard of similar limitations in other companies? What could be a reason for such a restriction? Thank you.