Message Boards Digest

April 25, 2022

Here are the most recently added topics on the BenefitsLink Message Boards:

Nate S created a topic in Retirement Plans in General

Leased Employees from Within a Controlled Group

"A large employer (closely held by father and 3 kids) has 7 leased employees (no coverage issues, this is purely an allocation eligibility issue); the plan excludes leased employees. But as it turns out, the leasing employer is in a controlled group with the recipient employer, because the father, and a family trust comprised of the spouse and three kids, are also the owners of the leasing employer. As such, are these 7 employees still able to be excluded due to the leased employee classification; or should they be benefitting participants because the controlled group means they are just treated as employees of the sponsoring employer?"

3 replies so far   |    Click Here to Add a Reply

EBECatty created a topic in 401(k) Plans

PEO Plan Says It's a Single Employer Plan

"I am not heavily involved in the PEO, MEP, PEP, etc. field, so would appreciate any input here. I've come across a few large PEO plans that treat their 401(k) plans as multiple-employer plans on their 5500s. They generally report as a multiple-employer plan and file the schedule of contribution allocations for participating employers. I recently came across one that, on its 5500, says it is a 'single employer plan which is operated consistently with the requirements for a multiple employer plan[.]' The 5500 is marked as a single-employer plan. There is no list of contribution allocations for participating client organizations. Plan design elections and compliance testing is done on a client organization/participating employer basis.

Am I missing a nuance between a multiple-employer PEO plan and a single-employer PEO plan that is treated as a multiple-employer plan?"

3 replies so far   |    Click Here to Add a Reply

ColeC created a topic in 401(k) Plans

Solo(k) Document / Registration Failures?

"I need help with 2 Solo(k) issues.

First scenario: Client had a Solo(k) at Oppenheimer and utilized their prototype plan document. Advisor moved the plan to Pershing and completed Pershing's retail account paperwork in the name of the Solo(k) (i.e. John Doe Solo(k) plan). Pershing never questioned the registration and opened the account as a retail account. Because the account was opened as a retail account, the paperwork to utilize Pershing's prototype plan document was never completed. Per Pershing, they are acting only in a custodial capacity. That was in 2011. Client has received 1099's from the account for the last 11 years and has never said a word about them. Not sure if he has reported them on his income taxes. Would I be correct to say that the plan really does not exist at this point? No plan document was ever issued by Pershing. I don't think we can consider the Oppenheimer document as a valid plan document any longer, since the plan was moved from Oppenheimer. No restatements have been done in 11 years. To make matters even worse, the plan is over $250k in assets and has never filed a Form 5500. Several issues going on. I specifically need help on [1] Plan document failure - can this be correct? If so, how? [2] Should we request that Pershing re-register this account as a Solo(k)? [3] What do we do about the 1099's? Do we even try to correct those at this point? [4] Failure to file Form 5500 - how should we correct this issue?

Second scenario: Client completed paperwork to open Pershing Solo(k). Plan was to use the Ascensus prototype document service. Paperwork was sent to B/D. B/D sent paperwork to Pershing, who opened the account. Pershing is acting in a custodial capacity only for this plan. B/D failed to transmit paperwork to Ascensus. Ascensus never issued a plan document for this plan. They have no record of the client. Client has been funding the Solo(k) for several years without a plan document. Is there really even a plan in place? Can this be corrected?

I appreciate any guidance that you can give to help me get these clients back on track."

1 reply so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Retirement Plans in General

On July 1, 2022, Must Spousal Consents Resume Physical Presence Before a Notary?

"For a spouse's consent to an election against a survivor annuity or naming a beneficiary other than the participant's spouse, the IRS has relaxed the physical-presence condition and allows -- from January 1, 2020 through June 30, 2022 -- a remote witnessing that uses live audio-video technology and meets all requirements and conditions under the State law that applies to the notary or, for a plan representative, meets controls specified in the IRS's notice. IRS Notice 2021-40; 2021-28 I.R.B. 15 (July 12, 2021); Notice 2021-3, 2021-2 I.R.B 316 (Jan. 11, 2021); Notice 2020-42, 2020-26 I.R.B. 986 (June 3, 2020).

Do we guess the IRS will let this relief expire with June 30? Or does anyone predict another extension?"

No replies yet   |    Click Here to Add a Reply

Tax Cowboy created a topic in Employee Stock Ownership Plans (ESOPs)

Sam Zell's ESOP-Leveraged Purchase of the Chicago Tribune

"In researching ESOP loans and potential prohibited transaction violations under ERISA section 406(a), I'm curious as to whether Sam Zell was assessed for violating 406 because that transaction seems to have been a direct transaction with a potential for conflict of interest. Did his bankruptcy discharge any potential prohibited transaction violations? Did the ESOP loan meet ERISA 408 exemption? Is ERISA prohibited transaction rule 406(a) intended for ESOP loans?"

1 reply so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Litigation and Claims

What Percentage of Fiduciary Breach Lawsuits Are Settled?

"For the fiduciary breach lawsuits that been in the news for the past 15-1/2 years, has anyone done a scorecard on how many, or what percentage, were completely dismissed? Were won by the plaintiffs? Were won by the defendants? Were settled?"

3 replies so far   |    Click Here to Add a Reply

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