Prime Pensions, Inc.
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Central Pension Fund of the IUOE
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Retirement Plan Legal Specialist Pentegra
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Jr Retirement Plan Administrator/ Administrative Assistant Hochheiser Deutsch & Co, Inc.
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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Nova 401(k) Associates
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Nicholas Pension Consultants
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Central Pension Fund of the IUOE
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Carpenter Morse Group
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Compass Retirement Consulting Group, Inc.
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Bates & Company
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Retirement, LLC
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United 401(k) Plans, Inc.
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Trucker Huss, A Professional Corporation
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Question 212: In discussing the upcoming third edition of your book, you mention that it describes EGTRRA-related changes to the controlled group rules. What are they? | |
Answer: EGTRRA does not directly change how controlled groups or affiliated service groups are determined. However, in several ways it changes how controlled group rules are applied, or applies them to new situations:
The key point to remember is that the controlled group, common control and affiliated service group rules are an integral part of the retirement plan framework. They are a basic part of determining who is treated as an employee. Thus, whenever there are major changes in that framework, the controlled group rules are woven into the changes. A good example is the change in the 401(k) distribution rules to permit distribution on severence of employment. Congress did not particularly consider how that standard would be applied in a controlled group situation. Fortunately, the IRS did give us guidance in Notice 2002-4 to show how the controlled group rules relate to the severence of employment rules. Another example is EGTRRA section 620, which exempts new plans of small employers from user fees on determination letter requests. That section never mentions the controlled group rules. But it refers to IRC 408(p)(2)(C) to determine if an employer is eligible because it has no more than 100 employees. Because the SIMPLE IRC 408(p) rules are determined with regard to aggregation under IRC sections 414(b), (c), or (m), all related employers are treated as a single employer in determining whether the sponsor is eligible for the user fee waiver. You don't have to mention the controlled group rules for them to have an important impact. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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