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Found 12 results

  1. An attorney has a P.C. (100% owed). he also owns 50% of a CPA firm with which he is associated. No doubt, this is an A-Org/FSO ASG. Sometime in 2020 he sells his interest in the CPA firm. He still works there, but is no longer an owner. Does this break the ASG in 2020? When do we make that determination? First day of the year? Last day of the year? Any day of the year? I don't see any guidance on this. If this were a controlled group issue, does the determination date differ?
  2. Potential client has ownership interests in a few management companies. Each company was set up to manage one operating company that has employees. Each management company receives 100% of its business from the operating company it manages. Client has no ownership of operating companies and management companies have no employees. Each pairing is a management affiliated service group. Payments from operating pass through the management company to an equity holding company. Equity holding provides client with K-1 self employment income. This income reflects on 1040 SE. The management companies are disregarded where the client has self employment income with regard to the management companies? 301.7701-2 Tracing the income to a company within an affiliated service group, does that designation attach to the income , precluding client from adopting a 1-man DB plan in his sole proprietorship with the net earnings? Or would the client sole proprietorship fall outside the affiliated service group, as the income comes from enough operating companies that the 50% management business is not met?
  3. I have a client that owns 1) 100% of a Schedule C construction company 2) 50%/ 50% with another partner of a company that runs the management functions of the construction company and 3) 50%/ 50% with the SAME other partner of an unrelated independent living center. The owner wants to set up a deferral-only 401k plan covering the 1) Sch C Construction company and the 2) management company (as an affiliated service group). Does the addition of the management company as an affiliated service group extend the control group requirements to it as well? In other words, by including the management group, are we now required to include the 3) independent living center because it is a control group with the company that was brought in as an affiliated service group?
  4. For the A-org test, if the purported FSO is an LLC that has elected to be taxed as a corporation and that is not a professional service corporation (or a professional service LLC), would it fail to be an FSO as a "corporation" that is not a professional service corporation since it is being treated as a corporation for tax purposes? Or would it have to actually be incorporated under state law (and not just treated as a corporation for tax purposes) to be considered a corporation for purposes of this rule?
  5. As part of a plan merger we are looking at one of the plans subject to the merger. Organization has four owners who each have established their own LLC and elected to be tax as an S Corp. Each LLC owns 25% of the organization and is receiving guaranteed payments from the Organization. Each S Corp is then paying W-2 compensation to the owner from proceeds received as guaranteed payments. Current arrangement allows each S Corp to have its own retirement plan and be tested separate from the Organizations plan. The TPA firm says based on ownership and related that they should not be considered related organizations for retirement plan purposes. The Organization is in a service business. I am trying to explain the technical reason they should be considered one plan for testing purposes. Any thoughts?
  6. A 2/3 owner in a Salon also has a Sole-Proprietorship, in which she pays herself for services performed in the Salon. She maintains a Solo-401(k) for her Sole-P, which she maxes out. Is this an Affiliated Service Group, or does a Salon not qualify under the definition of a Service Organization? Thank you
  7. I would be truly grateful if someone could confirm that the following are affiliated service groups. Hospital Company has agreed to hire as employees, all the members of Doctors Company who will primarily/exclusively perform services for Hospital Company and will be highly compensated by Hospital Company. There is no common ownership between Hospital Company and Doctors Company. Hospital Company is a FSO and Doctors Company is a B-Org, despite the lack of common ownership, correct? I really appreciate any help provided!
  8. Filing for excise tax refief for missed RMD (through VCP) and struggling to correcting answer this: At least one affected participant is either an owner-employee (see IRC Section 410(c)(3)) or, if the plan sponsor is a corporation, a 10 percent owner of such corporation." Plan sponsor is a partnership. Some partners are professional corporations. Affected participant is the 100% owner of her P.C., which is less than a 10% partner of the partnership sponsoring the plan. For 401(a)(9), she is a 5% owner because Section 416 is cross referenced for that determination and those rules apply ownership test separately for members of the affiliated service group. But it isn't clear to me whether the VCP form question is intended to refer to the partnership that sponsors the plan or would include owners of the P.C.s that are members of the affiliated service group (and related participating employers in the plan). I'm not seeing an answer in either the form or the definition in 401(c)(3). There is no reference to 416 so I am inclined to apply the ownership test only at the partnership level. Can you offer any insights?
  9. I have a client with 3 seperate companies. I won't get into the weeds but here are the facts: Company A is FSO with Company C as the A-Org Company B is FSO with Company C as the A-Org Company A & B are not related through ownership, however employees for both A & B do the billing for A & B making them B-Orgs for eachother My question is, since A if affiliated with C (A-Org), B is affiliated with C (A-Org) and A is affiliated with B (B-Org), Are all three related or... Should A be tested with C, B tested with C, and A tested with B? Is it possible to combine all three for testing?
  10. I have a question about determination of 5% owners for purposes of RMD rules. Law firm partnership has a 401(k) profit sharing plan. Several partners have P.C.s that have adopted the plan as participating employers. The owner of one of these P.C.s has just attained age 70 1/2 in 2015. He owns less than 5% of the partnership by capital interest or profits, but of course own 100% of his P.C. For testing purposes, all of the employers of the plan are aggregated under 414(m). Does aggregation apply for determining 5% owners for 401(a)(9) purposes? 5% owners are defined as under the top heavy rules, and aggregation applies for top heavy, but does that mean aggregation applies and only those who own 5% of the partnership are treated as 5% owners for RMD purposes? Put another way, is this partner's first distribution calendar year 2015 or will it be deferred until the calendar year in which he retires?
  11. This is a new one for me. Companies A & B and companies A & C are controlled groups (B&C and A&B&C are not controlled). Company A is the General Partner of company D only 1 % ownership but looks to be clearly a management group for company D. D has no employees. Company D owns 100% of company E and 55% of company F. Currently they have a multiple employer plan. A,B,C operate a single plan. D and E are adopters of that plan. They share the 5500 but test seperately. What they want...is to have all the companies under a single plan. I don't know of any rule that lets you tie togeather companies with a combination of controlled and affiliated groups. As I see it D and E are adopters of the ABC plan and should have seperate 5500's and seperate testing. With AB&C do they have to do two sets of tests as well? One for A&B and one for B&C? I'd appreciate any input.
  12. Company A owns 60% of Company C. Company B is a single owner LLC which owns 20% of Company C. Company C is a participating employer in Company A's 401(k) plan. Company C provides IT consulting services focusing mainly on integration services. The owner of Company B works 100% of his time for Company C providing IT consulting services and management services. 1. Does an A-Org group relationship exist between Company B and Company C? 2. If so, is there an affiliated service group relationship between Company A and Company B? 3. If so, can Company B adopt Company A's 401(k) plan as a participating employer? 4. If so, regarding compensation for the owner of Company B, then compensation for testing and contribution purposes would be taken from K-1?
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