Two companies (A & B) with identical ownership: owner #1 = 25%; owner #2 = 25%; owner #3 = 25%, owner #4 = 8%; owner #5 = 8%; owner #6 = 4% and owner #7 = 4%. I've had a brain freeze... where the controlled group rules state 'the same 5 or fewer', it doesn't matter if there are more than 5, just that 5 or fewer own 80% or more, correct?

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Is anyone else receiving CP259 Notices from the IRS asking for a 945 form for 2016? I received copies of the notices from two completely unrelated clients, both of whom have plans on a recordkeeping platform in which distributions are processed under the recordkeeper's EIN. Because we have a small number of clients, I'm thinking this might not be just a coincidence.

The notice is due by November 1. Is there a limit to how early it can be distributed? Thanks "in advance"!

A client has a DB plan, started in 1998. The plan was subject to a Hard Freeze in 2016, and a new pension plan was established. The frozen plan is DB001, the new plan DB002. Both plans are overfunded with significant excess assets. DB001 accrued benefit is $12,000/mo, DB002 $1,500/mo. Both plans terminated in 2018. Participant is now 70. The aggregate 415 limit is $14,166.67/month (C limit) and the aggregate 415 LS (both plans) is $1,799,000. Note the accrued benefits in both plans is $13,500 < 415 limit. My question is, how do I apply the 415 limit to each plan? The plan document says to apply the 415 limit first to DB001. The problem comes from the MPV which impacts the 415 limit even though the total accrued benefits as annuities do not exceed 415. The PVAB (MPV) is $1,700,00 in DB001 and $225,000 in DB002. It seems that DB001 pays the full PVAB and DB002 get the knife. This doesn't seem right. Is there another approach?

There are two entities -- A and B -- in a controlled group. Each has its own 401(k). We want to eliminate B's plan at the end of the year, but over the course of the next few months, a bunch of B employees will be moving to A and will be immediately eligible for A's plan. So, we are going to violate the 2% rule under the successor plan rule because at least 2% of the participants in the B plan will have participated in the A plan in the 12 months leading up to terminating the B plan. Is there a way we can spin off the accounts in the B plan of the people we expect to transfer to the A plan? That way we'd have B1 holding those accounts and B2 holding the other accounts. At the end of the year, we can terminate B2 without any successor plan issues, and merge B1 into the A plan. Any thoughts or issues?

Has anyone done an Anonymous VCP submission through pay.gov yet? I'm wondering how to handle the payment. They only take ACH and credit cards. Doesn"t seem very anonymous.

We use Sharefile. It's OK, but it's too complicated for a lot of our clients. Sharefile is integrated with Outlook so we can easily encrypt our attachments, and our clients can upload files directly to our own personal in-box. But the password thing is clunky, clients always forget their passwords, etc. Anything better out there?

Sole Proprietor has set up 5305-SEP and wants to set up a 401k plan for current calendar year and only contribute to 401k plan. No contributions yet for current calendar year. He will notify recordkeeper that he will terminate the 5305-SEP. Can the PS feature of the 401k plan be effective 1/1 of the same year, which is prior to the 5305-SEP being terminated?

A current physician practice bought another practice in an asset sale. The assets of the benefits plans were not included in the sale. May the new employer bring the employees of that plan into their plan immediately and count service with the prior employer for eligibility and vesting? Is a plan amendment needed?

We are working through our list of clients that need the PPA restatement for their current documents. I have come across a plan for a Boys and Girls Club. I know that 'nonprofit recreational clubs' are tax exempt but cannot sponsor a 403b plan. Would a Boys and Girls Club fall under this definition of 'nonprofit recreational clubs'? Does anyone reading this blog have Boys and Girls Club as a client who have a 403b plan? Or is it enough that the Form 990 reflects the company as a 501(c)(3) organization?

A company had a layoff where 30% of their employees were let go in February 2019, so it's a clear partial plan termination and they will be 100% vested. IRS guidance seems to indicate that any other participants who leave the company during the same plan year, even voluntarily, would also become 100% vested. Is that correct? "An affected employee in a partial termination is generally anyone who left employment for any reason during the plan year in which the partial termination occurred and who still has an account balance under the plan."

We have a plan that is a spin-off from another plan. Do we have issues regarding protected benefits that need to be addressed in the new plan's adoption agreement?

Traditional 401(k) -- not safe harbor. Plan sponsor had small system glitch in last half of 2018, so one NHCE received $86 more match that he should have. It was discovered during the audit. HCEs received refunds of excess deferrals for failed ADP. Plan sponsor would prefer not to ask for the $86 back from NHCE. Is that an option, or does that cause other problems?