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Hello, One year in practice ERISA attorney here, so please, go easy on me. FACTS In the financial services industry, three individuals, A, B and C each maintain their own entity in which the individual has 100% ownership. A's LLC - maintains no plans. B'S LLC - maintains a SIMPLE 401K in which only B participates C's Corp. - maintains a SEP in which C and spouse participate. Each entity has a 33% interest in the Main LLC. A, B, and C, through their entities, provide financial advice to clients of the Main LLC. Main LLC then pays A, B and C's entities 1099 income. Main LLC has five employees, none of which are A, B or C or their spouses. The employees of Main LLC have never been given the opportunity to participate in either the SIMPLE or the SEP. CONCLUSIONS I've concluded that under the ASG rules, Main LLC is a FSO and A, B & C entity's are A-Orgs. Thus, Main LLC and A, B & C's entities are an affiliated service group. Client is the Main LLC, and its goal is to provide a retainment plan for the Main LLC and its employees. Potentially later adding in a health plan. My conclusion is that B LLC's SIMPLE 401(K) AND C Corp's SEP have both made significant errors and must make a VCP submission. However, how can they correct with the improperly excluded employees? ERRORS SIMPLE 401(k) Maintained during the same year as another retirement plan. Contributions must stop immediately. Main LLC employees improperly excluded. Make corrective contributions to employees. SEP Main LLC employees improperly excluded. Make corrective contributions. How can both Plans be corrected? Do you undo the SIMPLE contributions/correct deferral deductions then terminate the Plan?

This comes from a CPA we work with. I'm not familiar with SIMPLE plans, so hoping others here can help. The client had a SIMPLE 401(k) plan, with the 3% match. The owner somehow managed to start automatically sending money from her personal checking account to the SIMPLE plan on a monthly basis. Normal contributions were made through the company, no excess from that. No match was made on the personal funds. It started in September 2022 and she discovered the error recently. About $5500 in 2022 and again in 2023. Can this be self-corrected by removing the personal funds with earnings?

The employee contribution limits for SIMPLE IRA and SIMPLE 401k is currently - $13,000 for Employee Contributions and an additional $3,000 for employees over 50 years of age. Does anybody know whether this limit applies individually to Simple IRA and Simple 401k or combined. Example is if the employee is over 50 and contributes to both Simple Ira and Simple 401k in the same year. Is the overall limit still $16,000?

What are the ramifications of a company that has a SIMPLE 401k in place, and sets up a normal 401k plan in the same year. I know you cannot have any other plans if you have a SIMPLE 401k. Would that disqualify the entire SIMPLE plan or just the current year contributions? Would it only affect Highly Compensated employees, or everyone? thanks in advance