Leaderboard

The IRS takes no position on it - the bond requirement comes from Title I of ERISA which is under the purview of the DOL. A plan which covers only an owner and their spouse is exempt from Title I and thereby bonding requirement. A plan which covers only an owner and their mother does not fall under this exemption and therefore is subject to Title I and everything that comes with it, including the bonding requirement.

"Gee, that's interesting. What is your citation for that information". You will find that when you ask that question, you will NOT get an answer because there is not any such opinion from DOL and, moreover, DOL will specifically NOT get involved in such a discussion.

I agree with ESOP guy. No problem with the rollover. Inaccurate/incomplete reporting (5500) is the primary issue. I might be willing to have the sponsor tell me not to (re) file and file. And in theory the plan document may not have been maintained properly; it should have been/should be updated for any relevant necessary changes while the plan was still operational.

I don't think the issue is the rollover. I see no reason the rollover would be an issue. I think the issue is the plan wasn't really terminated back in 2017. So the question is does the plan need to go back and amend the 2017 5500 and file a 2018 5500 and will need a 2019 5500 for the short plan year until the assets leave the plan in 2019? If it were a small amount I would say no harm no foul and say just get the assets to the IRA. But you say it is a large amount. I think I would look into what happens if you say the plan wasn't really terminated. You might have to file the 2018 5500 under the late filing program to keep the late filing penalties to a minimum. Like I said the assets were in a plan and are being rolled to an IRA so I don't see why the rollover can't happen. As always I am happy to be told I am thinking of this wrong but to me this plan wasn't actually fully terminated in 2017 that is the "primary sin" of this issue.

Nope - was going to reach out and ask.

A client just sent us an approval of 5558 extension dated 10.21.2019 for the 2008 calendar plan year. 10 years too late.

This is a typical ethical conundrum. What to do; what to do? Each of us has to answer to our own ethics and our own guiding rules and hopefully they will not conflict. What would I do? Let me think.... 1) Resign. Immediately, with a letter and an explanation that I believe they have both disqualified their plan (the 415 issue) which means their rollover IRA is "no good" and subject to the 6% cumulative compounded excise tax which will eventually take 100% of the rollover as an excise tax when the IRS challenges it, and I would also explain that they have actually stolen money from other participants and besides possible criminal penalties, IRS penalties and DOL penalties, their bonding company is also going to go after them since the bonding company will have to make the other participants whole to the extent of the theft. 2) No way we are going to prepare a 5500 at all; see 1 above. We no longer work for this crook. 3) Now the hard one: what do I do about reporting this to someone? I'm pretty sure I don't have a legal obligation under the society ethics rules. Now, what about my moral responsibility? If a participant calls, I'm going to tell them to contact the DOL since I no longer work for the client. Since I have never actually had to deal with this kind of an issue, I'm not sure what I would do. My heart tells me that the crook deserves to be taken to task, which would mean the DOL has to be notified. Is there a John Doe notification to DOL like IRS has John Doe ruling requests? I'm sure a private phone call to the local DOL office will get action. Would I do that? Hmmmmmmm.......

The redacted IRS approval letter linked in that ASPPA article can go in the Humor section. The letter dated 7/30/2018 says the extension requested for the plan year ending 11/30/2012 has been approved to 9/16/2013. I've had them take 4 or 5 months to process an extension, but not years.