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Message Boards Digest

August 29, 2022

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

cathyw created a topic in Retirement Plans in General

Are these related entities?

"Husband owns a business that is predominantly non-service (warehouse, sales, capital intensive inventory) but does provide some related service such as installation of products. The business has over 200 employees. Wife has been on payroll but will be terminated in 2022. Wife owns a service business with no employees. Husband’s business enters into a contract with wife’s business starting in 2023 which generates the majority of wife’s business income. (This, of course, is subject to the accountant determining that there is a legitimate business reason to pay such amount to wife’s business.) Wife intends to set up a pension plan for her business starting in 2023 with her as the only participant. Effective 2023 wife will not be an employee or involved in management of husband’s business, and husband will not be an employee or involved in management of wife’s business; therefore I believe there is no controlled group. I don't think there's an affiliated service group -- husband's business cannot be the FSO as it doesn't seem to be a service organization; and if wife's business is the FSO I don't see how husband's business could be an A org or B org. Any contrary opinions? Thanks."
4 replies so far   |    Click Here to Add a Reply

Will.I.Am created a topic in Distributions and Loans, Other than QDROs

Controlled Group - Two Plans to Avoid Audit and Aggregation

"I am looking at setting up two plans for a controlled group. The entity structure is as folllows: Company A is owned 100% by husband and Company A owns 100% of Company A1 and 70% of Company A2 (the other 30% are unrelated owners) Company A1 and A2 are restaurants and Company A is a management company. Company B is owned 100% by wife (married to husband above and husband and wife participate in all businesses) and Company B owns 100% of Company B1 and 100% of Company B2, Company B1 and B2 are restaurants and Company A is a management company. If we did one plan to cover all entities it would have enough participants to require an audit. What we are looking to do is have two plans (both plans would be designed the exact same) and Plan 1 would cover Company A and Company A1 and A2. Plan 2 would cover Company B and Company B1 and B2. By have two plans each plan would have less than 100 participants and neither one would need an audit. I have the following questions: 1. the affiliated service group rules don’t apply here since these entities are mainly restaurants, right? 2. Wouldn’t Plan 1 technically be a multiple employer plan because of the 70% ownership of company A2? (Doesn’t rise to 80%) 3. If Plan 1 is a multiple employer plan (which I think it is) can Plan 1 be aggregated with Plan 2 for testing purposes (coverage and nondiscrimination)? Technically wouldn’t you just be aggregating Company A and A1 in Plan 1 with Company B, B1 and B2 in Plan 2 and company A2 would be tested separately? 4. Are there any risks to structuring two plans instead of having just one to avoid an audit?"
1 reply so far   |    Click Here to Add a Reply

Will.I.Am created a topic in Retirement Plans in General

Controlled Group - Two Plans to Avoid Audit and Permissive Aggregation Question

"I am looking at setting up two plans for a controlled group. The entity structure is as folllows: Company A is owned 100% by husband and Company A owns 100% of Company A1 and 70% of Company A2 (the other 30% are unrelated owners) Company A1 and A2 are restaurants and Company A is a management company. Company B is owned 100% by wife (married to husband above and husband and wife participate in all businesses) and Company B owns 100% of Company B1 and 100% of Company B2, Company B1 and B2 are restaurants and Company B is a management company. If we did one plan to cover all entities it would have enough participants to require an audit. What we are looking to do is have two plans (both plans would be designed the exact same) and Plan 1 would cover Company A and Company A1 and A2. Plan 2 would cover Company B and Company B1 and B2. By having two plans each plan would have less than 100 participants and neither one would need an audit. I have the following questions: 1. the affiliated service group rules don’t apply here since these entities are mainly restaurants, right? 2. Wouldn’t Plan 1 technically be a multiple employer plan because of the 70% ownership of company A2? (Doesn’t rise to 80%) 3. If Plan 1 is a multiple employer plan (which I think it is) can Plan 1 be permissively aggregated with Plan 2 for testing purposes (coverage and nondiscrimination)? Technically wouldn’t you just be aggregating Company A and A1 in Plan 1 with Company B, B1 and B2 in Plan 2 and company A2 would be tested separately? 4. Are there any risks to structuring two plans instead of having just one to avoid an audit?"
1 reply so far   |    Click Here to Add a Reply

arthurkagan created a topic in Distributions and Loans, Other than QDROs

Arthur Kagan

"Plan participant first wife dies. He names daughter as beneficiary of his 401k plan, and also as beneficiary of the 401k plan in his family trust. He remarries and dies several years thereafter without naming his new wife as beneficiary of his 401k plan. The daughter is claiming the benefit. The new wife disagrees. Who is right."
2 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Pooled employer plan

"Hi, When a employer decides to discontinue in the pooled employer plan (PEP) and allows distribution, will the participants needs to be 100% vested? can someone share the IRS/DOL rule on vesting for PEP ( plan termination) Thanks"
No replies yet   |    Click Here to Add a Reply

Coleboy1 created a topic in 401(k) Plans

Participant Moves from one Location to Another

"Client has 2 locations with separate plans to avoid being a large plan filer. One participant has moved from one location to another. Should her account balance be moved to the new location as well? If so, would this be treated as a regular rollover distribution where the employee has to complete distribution paperwork and a 1099R is generated? Or can it just automatically be moved? The amount in question is over 100K. Thank you!"
7 replies so far   |    Click Here to Add a Reply

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