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Ethical question involving ERPA's employer


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HYPOTHETICALLY - ERPA is employed by a small TPA firm (only 2 or 3 EEs), and the owner adopts a PS/401(k) plan. No PS or deferrals ever made; he opens checking account and rolls over money from an IRA. Over next year or so, withdraws all the money, closes bank account, and never files 5500-SF or 1099-Rs. Due to function in company, ERPA is fully aware of all of this.

1) Any suggestions on how to rectify this?

2) Any EPCRS program applicable? Any experience with anonymous submission?

3) How might IRS get wind of this?

I actually posted this awhile ago but the only response I got was "Good luck". I was hoping for something more constructive.

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It is my understanding that if one were talking about an enrolled actuary, the only circumstances under which dropping a dime is mandatory would be if the enrolled actuary certified a governmental form for filing that the enrolled actuary knows has not been filed. Which is not to say that there aren't other circumstances under which the enrolled actuary needs to consider finding employment elsewhere.

What rules apply to ERPAs?

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Was the ERPA involved in making any of this happen? If not, I don't see where the ERPA has a profession obligation to do anything about it. We become aware of non-compliance all the time when talking with CPAs, advisors and prospective clients about plans. If we're engaged, we have a duty to properly advise the client of the requirements and the consequences of non-compliance.

Does the owner want to correct this or not? Is the owner asking the ERPA's advice on how to fix it? From the way the post is worded it sounds like the owner is not looking to fix it, the ERPA is just aware of it.

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The practice consists of only owner and ERPA (J. Doe). It is Doe who does all the administrative work, including filing SS-4s, preparing plan documents, reconciling bank accounts, preparing 5500 filings and preparing 1099-Rs. However, the plan was adopted, money rolled into bank account, and all but a few hundred dollars withdrawn before Doe even became an ERPA (i.e. Doe was not ERPA at time most of this occurred, but was ERPA when all reporting would have been due)

So what would IRS expect of Doe considering this could jeopardize Doe's employment? What, if anything, would the IRS probably due regarding Doe if it discovered this? Assuming owner agrees, clearly one of the most important steps would be to issue 1099-Rs so that taxes are paid on the money withdrawn. Beyond that, what suggestions on the best way to remedy this?

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I still don't understand the concern. I am unaware (not an expert on the topic either) of any obligation to report illegal acts an ERPA becomes aware of or an obligation to fix a plan the ERPA doesn't control.

At risk of over reading this question someone seems to be looking for a fight.

The ERPA doesn't control the situation so they can't fix it without the owner's help. If the owner wants help then a VCP looks to be in order. If the owner isn't interested in fixing I see no obligation on the ERPA. The ERPA should let it lie.

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