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Yes, it is that time of year again – the annual tax lament, to the tune of “Yesterday” by the Beatles. Remember, it is only when the final line is truly sung from the heart that one can appreciate the scope of anguish and angst that the artist is attempting to convey… Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.

You know you haven't been to an in-person conference in a while when you read this as a @S Derrin Watson song....

IRS just issued Notice 2021-31 (41 pages, 86 Q&As) -- which does address this question (Q&A 77, page 36): https://www.irs.gov/pub/irs-drop/n-21-31.pdf

Of course that assumes those individuals were truly independent contractors. If nothing in the relationship changed except the employer "flipped a switch" and presto chango now everyone is magically an employee, then there is certainly some risk that IRS could retroactively reclassify them as employees from the start. Absent one or more of these individuals pursuing/inquiring about this directly with IRS or DOL, the chances of such are probably slim but something of which the employer should be aware I would think.

Unless those senior managers are owners, or relatives of an owner, then they are not HCE year 1. Is there even a coverage test even needed?

You are welcome! These are original lyrics by yours truly, so I'm glad if they give anyone a smile, that was the whole purpose. Of course, I didn't update them for the freak tax filing deadline this year - too much work.

Hmmm...I was channeling Tom Poje (as opposed to Derrin) when I read through it Nevertheless - fun again to have something bring a smile this time of year, thank you Belgarath!!!

I'm an HR manager (client of a TPA but did 401k recordkeeping back in the stone age of mainframes right up until things went daily) and part of my exit interview with employees is going over their balance and providing the distribution form and Special Tax Notice in that email. These were provided by my TPA for our usage. Many times I explain to small balances that if they leave the form completed with me, I can process and get them a check/direct deposit a few weeks after their last paycheck. It seems to work about 80% of the time. But my employees are lower paid, non-profit employees so they need all the $s they can get. My goal is to stay a small plan and not need an audit....and to not lose small balance participants. But the client does also need to stay on top of it if you can get them to add it to their exit interview/meeting.