Leaderboard

... from the view of unread topics (condensed or otherwise) right click somewhere and get an option to: "Open each thread to next unread post in separate tabs" mike

Carol, This issue does track back to the regulation you cited. Some background may be helpful. First, there is the March 13, 1998 IRS Memorandum from Robert Padilla which includes: "... the plan must provide that the trustee be given written notification from the employer as to the amount of the contribution to be allocated to each group." You will also be able to find various IRS representatives making statements that the plan sponsor must provide written instructions to the plan administrator or trustee. Some of those statements will include a requirement for contemporaneous instructions. Some won't. I've never been able to find anything definitive as to the required timing. The closest I've come is language from the current LRM's which reads: "The employer will specify in written instructions to the plan administrator or trustee, by no later than the due date of the employer´s tax return for the year to which the employer´s contribution relates, the portion of such contribution to be allocated to each participant allocation group." If anybody has anything more authoritative I'd love to see it. But based on the above, the document language you describe should easily pass muster.

You had a signed document in 1993 and didn't have another until 2010? I'm wondering if there were a couple of missed restatement cycles in there.

Thanks. This gets a bit maddening. Had someone at the insurer suggest they "don't really police these sorts of provisions" but then admit that coverage cannot continue indefinitely so I asked "Does that mean 1 month, 3 months, or more like 9 months? Can the employer just set their policy at some definite leave period and continue coverage for at least that long so long as the employer is consistent?" Response was that it was probably more like three months max but it's not really written down anywhere by the insurer. How is an employer supposed to draft a policy that correctly tracks the insurer's documents when those are so vague almost to the point of ignoring the issue.

Pardon my jumping in here - fascinating thread and a variety of positions.... I think the answer to the question posited above is "if you KNOW or SHOULD HAVE KNOWN that you were facilitating your client's fraud, you have liability - EVEN IF you explained to them that what they were doing was incorrect. Merely completing the form with data you KNOW or SHOULD HAVE KNOWN to be incorrect causes you to incur liability." Now, keep in mind, if there is an honest disagreement, or a reasonable basis for doing what they are doing, an appropriate CYA may protect you - but if it clearly is not appropriate, then your facilitation of that act can be problematic. PLUS, it'll ruin your reputation for being a "professional" at what you do. Personally, I'd address it delicately with the client. A discussion around "pay is "comp" for plan purposes ONLY IF it's for work performed. "Hours" means hours ACTUALLY WORKED (or in some limited circumstances, that which you should have worked and been paid for), and the like. Depending on the circumstances, I'd even say to the client, "your accountant said..." and have a discussion about the merits of maintaining the plan as a tax qualified plan. If all else fails, I'd probably fire the client (and I know, business is business, but you won't get many new clients if you let an existing client do something really really wrong. Let me posit an extension of the hypothetical: Suppose you do nothing and the client get's audited and this is discovered, plan disqualified. Client talks to accoutnant, accountant say "I TOLD THE TPA - experts in the field, and they did NOTHING." You think people might be looking to you for "malpractice" as "experts" in the field who knew something was amiss and didn't bring it to their attention? By the way, under any scenario, the accountant is toast....

on Jeopardy they would ask you to rephrase the question, I'm sure. you can only exclude that person from coverage if the allocation requirements indicate terminated participants are excluded from receiving an allocation - just to make sure! if it is a 401k plan, and the person could have deferred (whether or not he did is irrelevant) then he has to be included in the avg ben pct test, because that test includes all contributions, and, after all, he did 'benefit' (or could have benefitted) under the rules for a 401k portion of the plan. as opposed to a profit sharing only plan in which there is no way he could have benefitted. edited to add: so, in a 401k plan he shows on the avg ben pct test, but might not show on the rate group test.

No. No.

Even if the TPA is not actually preparing the return, you still have the issue of control of work product. The short answer would be you can't perform professional services if you have reason to believe that your work will be used to violate or evade the law. So you can't do the work but wash your hands of it just because you prepare the return. Circular 230 also includes language regarding errors or omissions from any return, not just the returns prepared by the practitioner.

I agree, I take my client's representation to me at face value and I don't cross that line either. If a client tries to involve me in a tax avoidance scheme or fraud, I would just resign and move on. Also, I don't think any of the CPAs I work with would tell me "oh by the way, Dr. Payne is giving his kids a salary so they can defer but they they never actually work for him". Even if that was the case, why volunteer that information in the first place?

Interesting exercise, but to be honest, I would never dream of questioning or "calling out" the service of the daughters, based upon the statement by the CPA that they don't work there. I feel like that crosses a line (what line, I'm not sure) but I frankly don't think it is my business to question that. Now, if the CLIENT had told me the daughters don't actually work there, that's a different circumstance altogether. Then I'd just resign as TPA. Can't correct egregious fraud under VCP! P.S. - question for the CPA's out there- is the CPA violating any professional ethics by telling this to the TPA?