Control group two plans

[SSRRS]

Two corps have the same owners and are a controlled group. 

Instead of opening one DB Plan to cover both corps, two DB plans were set up. 

One DB plan for each corp.

One owner was placed in plan A that covered him and the employees of corp 1 and the other owner was placed in the plan B that covered him and the employees of corp 2.

1. Owner 1 in plan A was supposed to take an RMD from plan A. Inadvertently took the RMD from plan B. 

Is this an issue, or since this is a control group, the plans technicly cover both entities?

2. What if owner 1 in plan A for a few years deposited his contributions into plan B, Inadvertently? 

 

Thank you for any insights into this!

[Effen]

It is ok that they have 2 plans, assuming both plans comply with the applicable non-discrimination rules.  Do they both cover at least 40% of the eligible workforce, or have at least 50 participants?

1) Definitely a problem.  They will need to reverse this.  Put the money back into Plan A, and take it from Plan B.

2) I know you think of contributions as "his" contributions, but they are corporate contributions.  "He" didn't really deposit "his" contributions into the wrong plan, the sponsor made the deposits, so that part is ok.  How were they reported on the SB?  Is plan A overfunded and plan B underfunded?  You cannot transfer money between plans, but you could merge the plans to equalize the improper contributions and avoid future MRD issues.    

[SSRRS]

Thank you Effen, as always.

You mention that If owner 1 of this controlled group, took his RMD from Plan B instead of from Plan A, it needs to be rectified. 

1. Can this be done by now taking his RMDs from Plan A for the past few years and then putting these RMDs into plan B, to.pay back the rmds inadvertently taken from plan B? He took the right amount the past few years just from the wrong plan.

2. Would the 5500s need to properly reflect the RMD from plan A, or is it enough that the 5500 for plan B shows the RMD each year, and the remedy  was done by taking from plan A and putting it back into plan B?

Meaning it is explainable why the plan B 5500 shows the annual RMD, as inadvertently it was tak taken from.plan B, and it was later rectified ?  Thank you!