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I'll assume that any seasonal employees who already are eligible for the plan will continue to be eligible. So this is a mid-year enhancement. Furthermore, we're enhancing eligibility, which is not part of the required content of the safe harbor notice from Treas. Reg. Section 1.401(k)-3(d)(2)(ii). Sure, you can make this amendment effective mid-year and don't need to circulate a new notice (although one would think the employer would want to promptly communication the plan enhancement). Notice 2016-16 governs the situation.

I head the Illinois CPA Society Employee Benefit Plan committee and this very topic came up in our July meeting. A committee member actually performs 3 zero asset audits each year. They contacted Marcus Aron of DOL directly and he informed them that the audit had to be performed, pretty much following the guidelines that Peter outlined above.

An efficient way to do this is for the healthcare lawyer handling the physician’s negotiation of his service agreement with the hospital to bring in her employee-benefits partner or, if the firm lacks an employee-benefits practice, to bring in another firm to add that knowledge.

I'd refer them to an ERISA attorney for an opinion. I hate ASG relationships.

Here’s the rule: 29 CFR 2520.104-50 https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-D/section-2520.104-50#p-2520.104-50(a) The rule’s definition of “short plan year” states such an accounting period could result because “[a] plan is terminated[.]” 29 C.F.R. § 2520.104-50(a)(3). The rule’s general relief, subject to conditions, states: “A plan administrator is not required to include the report of an independent qualified public accountant in the annual report for the first of two consecutive plan years, one of which is a short plan year[.]” 29 C.F.R. § 2520.104-50(b). The Labor department’s explanation of the rule, including the Secretary’s consideration of comments on the proposed rule, includes this example: “The operation of the regulation in a situation where a plan is terminating may be illustrated by the following example. A plan which has a calendar year plan year will be terminating on May 31,1981. Pursuant to § 2520.104-50(a)(3), the period from January 1, 1981, through May 31, 1981, constitutes a short plan year. The plan year from January 1,1980, through December 31,1980, is the first of two consecutive plan years, one of which is a short plan year. Under the regulation, the plan administrator is not required to provide audited financial statements in the annual report for the plan year from January 1,1980, through December 31, 1980[.]” Regulation Relating to Reporting and Disclosure for Short Plan Years [final rule], 46 Fed. Reg. 1265 (Jan. 6, 1981), https://archives.federalregister.gov/issue_slice/1981/1/6/1261-1266.pdf#page=5.

First the IRS has to find the employees, then train them. I think this new batch of agents will have their hands full for the next 5 years auditing the Employee Retention Credit - this is an easy target and they can raise a lot of revenue clawing the refunds back and adding penalties and interest. Hopefully they will leave TE/GE alone.

IRS will have more employees than the State Department, TSA, and one other government agency combined !

It seems there is an "incidental benefit" violation if the premiums are exceeding the incidental benefit limit. This could potentially disqualify the Plan if not corrected. I would look to correct under SCP depending on the specifics or the IRS' new pilot correction program by having an ERISA attorney handle the details. We have caught these failures proactively and remedied by reducing the premium thus reducing face amounts, distributions or purchases of the policies, or surrender.

Considering 46 billion added to current enforcement spending, I'd be surprised if some didn't trickle down to TE/GE. Not holding out hope that someone will actually answer phonecalls when a client gets an IRS love letter though...

Agree that having knowledgeable attorney opine is optimal choice but without overlapping ownership - doctors don't own any portion of hospital and hospital doesn't own any portion of doctors' practices - then I don't think you have an issue. I don't think the hospital could be a management company because the "back office" management services it provides to the doctors would be a sliver of its revenue. It is fairly common to see independent contractor doctors providing services to/through hospitals and many of these doctors have solo plans. But certainly it is worth consulting qualified legal counsel so everyone can sleep at night.

I agree with Luke and I think your summary document may not be correct. Say your original election was later of age 62 or separation. If you left at age 64, payments would begin at age 64, correct? But, a year before your turn 62, you elect to change the age to 67. You separate at 64. If payments begin at 67 they have only been deferred 3 years from the time they would have otherwise been payable (later of age 62 or separation, 64 in this example), not the required 5, and that would be a 409A violation. You should also note that 409A penalties (excise taxes, in addition to income taxes) are assessed to the employee, not the employer, so it is in your best interest that this is administered properly. It could be that the major firm taking over admin of your plan noticed this as a compliance mistake/issue and fixed it.

Thanks Peter. Also for us practitioners, the IRS funding is a thumb on the scale against clients tempted to play audit roulette (to mix my metaphors gratuitously).

You have a 415 excess or a 404 nondeductible suspense account issue.

Can you amend the W-2s?

The “short plan year rule” text on the Instructions’ page 8 is not, for as much as it explains, incorrect; it is incomplete. (Perhaps deliberately so.) Form 5500’s Schedule H at line 3d includes a checkbox for: “The opinion of an independent qualified public accountant is not attached because: (2) ÿ It will be attached to the next Form 5500 pursuant to 29 CFR 2520.104-50.” If that point is marked, I hope a Form 5500 report that omits an IQPA report should get through EFAST2’s check for internal logical consistency. Returning to bzorc’s query, we might learn something if bzorc can share with us whether it was EBSA’s software or a provider’s software that flagged a seeming error.

Yes. The insurance policies are plan assets and the premium payments are contributions. Reimbursing them from anywhere is not ok.

Perhaps John Doe might consider a choice of some different ways: 1) John pays BadgerDon or another capable service provider to generate the illustrations. 2) John, without a service provider, generates the yearly illustrations. 3) John disobeys ERISA’s command, estimating that John’s expense for the civil penalties and other consequences, discounted for the probabilities of detection and enforcement, and with adjustments for time values of money, is less than the expense of #1 or cost of #2 4) John spins off from the ERISA-governed plan the assets and obligations allocable to John’s account into a new plan designed to exclude employees (other than John, or another deemed employee). John would evaluate whether the extra burden or expense of administering this second plan—including coverage and other testing to be combined with the first plan, and Form 5500 reports on the second plan—might exceed the expense of #1 or cost of #2. Further, John’s expense or cost even for evaluating these choices might exceed the expense of #1 or cost of #2.

The descriptions are wide. Several appropriations are for multiple purposes without a breakdown within an appropriation. The Commissioner has discretion. See § 10301, https://www.congress.gov/bill/117th-congress/house-bill/5376/text?q=%7B%22search%22%3A%5B%22hr5376%22%2C%22hr5376%22%5D%7D&r=1&s=1 One useful (but small) appropriation is $104,533,803 “to carry out functions related to promulgating regulations under the Internal Revenue Code of 1986[.]” The legislation is good news for many of my students. Demand for tax advice and related services, and for a better quality of advice, goes up if business organizations believe a tax return might be examined. https://www.irs.gov/pub/irs-utl/commissioners-letter-to-the-senate.pdf

I assume this means the later of the two events. Because the later event could have been separation from service, the later of age + 5 years or separation from service + 5 years would typically be the only permitted further deferral. Of course I have not reviewed the documents or specific facts so am just addressing a hypothetical. Please consult your own tax adviser based on your specific facts.

It could also apply if the final plan year was a short plan year.

I agree with @Peter Gulia's "no advice" above. It shouldn't be an issue for the IQPA, just a bit more time and an additional line on the invoice...

I provide no advice. The plan’s administrator with its lawyer, and the independent qualified public accountant (IQPA) with its lawyer, might consider these steps and others. The plan’s administrator prepares a complete set of the plan’s general-purpose financial statements according to generally accepted accounting principles. One imagines most (but not necessarily all) amounts would be zeroes. The notes to these financial statements would include (at least) required explanations and other points. The IQPA reads the plan’s governing documents. The IQPA reads the employer’s business-organization documents to get reasonable assurance that no contribution was declared. If a bank or an insurance company set up an account, will the qualified institution furnish a certification to confirm the plan’s zero assets and that no money or property was delivered for investment? Absent a certification the IQPA may rely on, the IQPA performs such audit procedures as the IQPA finds appropriate to get reasonable assurance that the plan has no asset and has no contribution receivable. For each audit procedure the IQPA ordinarily would perform regarding another retirement plan, the IQPA records in the IQPA’s work papers why the procedure was unnecessary in this plan’s circumstances. The administrator signs a management-representations letter to state facts the IQPA reasonably requests to be confirmed. The IQPA reads the management-representations letter to find that all requested facts are stated. The IQPA reads the administrator’s Form 5500 report and schedules to find that these are logically consistent with the plan’s financial statements. The IQPA writes and delivers its audit report. The IQPA writes and delivers the after-audit communication required under generally accepted auditing principles.

Tom Callahan, Sr. once said, "Of course, I can get a hell of a good look at a t-bone steak by sticking my head up a bull's ass, but I'd rather take the butcher's word for it." CPA generates income values on K-1, as the TPA I'm going to take his word that they're reliable (excepting any prefunded employee allocations).