Defaulted loan and audit

[Monica Barnard]

Doc A set up PS plan in 1990, took $50k loan in 1999, repaid on schedule for about a year and a half. Doc A's PS Plan not funded since 1999.

Doc B comes along with his own PA. All employees now employed with Third PA. Doc A only employee of original PA. Doc B only employee of Doc B PA. I have notes in file that Doc A was advised by me and CPA that all employees should be covered by original plan or similar plan. Both Docs agree no new plan, no further contributions will ever be made.

Plan is audited. Loan issue is caught. Doc A repays loan with penalties and interest.

Auditor now wants census on Third PA. CPA says auditor is not entitled to that information. Is CPA right?

Thanks in advance for your help on this.

Monica

[JanetM]

Let me get this straight - Doc A has own company and plan. Doc B has his own company and NO plan. Employees are in company C that is owned and operated equally by doc A and B.

Employees in company C - with no plan.

My take - No control group if each doc only owns 50%. You have to MORE than 50% ownership to have CG.

Docs A & B can continue to be greedy not offer benefit plans. You don't have to give auditor census. I would ask the basis of the request.

[Kimberly S]

I agree no controlled group, but it sounds like a classic affiliated service group. In that case you now have a serious coverage issue.