Leaderboard

Sounds like you are offering to do even more work for no compensation. I like the other options better - either give the doc to the new TPA or the client. Charge the client for your time if they want to "review" it with you.

Send the document to the employer. Don't get involved in anything else, unless compensated. It sounds to me like they are going to be in trouble in a few years and you don't want someone trying to say that you are liable. In the future, you may want to include in your 408b-2 that there is an exit fee and that a standard set of documentations will be furnished for that fee (5500s for two years, plan documents, SPD, trust, etc.). We include everything on our list that a new provider should need to use to prepare the 5500 for the time period in the plan that the plan was under our control and if they ask for more, tell them there is a fee. We include language on the exit package that we no longer sponsor the document once it leaves us and make sure we put in writing the last 5500 we are responsible for preparing.

I think you use total deferrals, not just those deposited during the year. What if only $100 was deposited during the year? I'd use 5800/5850 as the factor.

I assume you've previously provided the document to the client so you could just direct him there. If the client doesn't have it you can charge reasonable fees for providing another copy. That said what comes around goes around and it's a pretty small industry. In days when it's pretty easy to just e-mail a copy of the Plan Document I typically just do so unless there are outstanding fees unpaid fees I'm trying to collect from the old client.

Isn't this similar to the relationship between a university and its foundation, which usually exists solely to raise funds for and financially support the university? Foundations will often provide supplemental pay or benefits to university leadership for various reasons, but generally not to avoid 410(b) failures. If that's the sole reason, I think there's a better chance of the IRS applying the anti-abuse rule, although the standard remains vague.

Yes, very similar in that the foundation (Org B)exists solely to raise funds for the operating entity (Org A).

I ignored the qta concept completely. It has been my experience that they are like unicorns. Theoretically they exist but darn if you can find one in the wild. I was talking about the receiver.

One way or another, whoever ultimately does the admin will need a copy of the current document to administer the plan, even if they will be amending it on to their document as they will need to make sure any changes don't violate 411 cutback provisions. whether they get that document from you or the client I'll leave to you. But you are under no obligation to explain the document to the new group. The new group is not your client, you don't have a service agreement with them. You could certainly send anything directly to the client and let them decide what to send to new group.

Bobby Bonilla Day is coming up, July 1. These deferred payments for professional sports contracts are nothing new. And as others have siad, I'm sure they have plenty of lawyers to dot the is and cross the ts to make sure it's all legal.