austin3515

Yes, but are they completely absolving the sponsor of any responsibility? I think not. How could a 316 accept responsibility for the accuracy of census data and that they indicated all of the correct family relationships (as an example)? How can the 316 ensure that deferrals do not take place from severance? Or that the max comp limit is not exceeded on a payroll-to-payroll match? Or all of the other problems that clients face? My point is fidelity bonds and SPD's and taking 35 seconds to sign a 5500 are not problems that need solving.

Well they come in with their marketing pitch about how they will do ALL of this amazing stuff, when what it really comes down to is they will mail out SPD's, which I would be happy to do for a fee. Oh whoops I almost forgot that they will also get you a fidelity bond. What a relief! There's 5 minutes saved every 3 years! And my biggest issue is that every critical problem I have ever seen a 401k plan is not addressed in any way by 316 services: Bad census data Bad vesting Ineligibles participating Payroll processing issues Late deposits Misclassified keys/ownership Controlled group/ASG issues Missing deposits Contributions to the wrong participant Contributions to the wrong source Definition of compensation issues Automatic enrollment issues I could keep going! And they charge a fortune!

I really like these message boards a lot... Thanks Kevin!

OK, but tell me what I'm missing in my analysis. Just before Loan 2, the outstanding loan balance is 8616 and the max is 8616. So how can the new loan be taken?

Attached is the full page from EOB. I think there is only a very limited opportunity to exploit the hole in the regs. I still maintain that what I said before is correct - you can't take that second loan for 8,616. The EOB makes it clear that you're loan balance cannot exceed the maximum available. There example "threads the needle" so to speak. Let me know what you think,. 201610180851.pdf

For the record, I am saying he is wrong. At least I hope he is, because otherwise I would be forced to use this approach in the right situation and it would be a lot of extra work! I am definitely looking forward to rebuttal arguments, don't get me wrong. I've seen ETA right about a LOT of things before, so my curiosity is piqued...

Well, they send out the notice saying it's 30 days, but the penalty is not assessed on the 31st day. As an example, I just did this with a plan where we didn't file because their bankrupt. If I was the DOL I suppose my preference is an incomplete filing as opposed to no filing at all. Anyway, I've never ever had penalties assessed. I was curious to see if others had similar experiences, etc. Do others not see the ASPPA article I posted as an affirmation that this is a pretty "normal" strategy?

I'm looking for the all ammo I can get against this 316 nonsense!

Well, I've done this several times (often on advice of counsel) ad have never seen this penalty assessed (i.e., the missing audit report penalty). FWIW...

"Your maximum available for a 2nd loan is now $8,616." How can you take that loan? Your max available is 8,616 and it is already outstanding after the first loan?

It won't Accept the filing, but it is still treated as filed for purposes of late filing penalties, etc.

What is everyone's position about doing this? Pretty commonly accepted process. See the attached link from an ASPPA article: https://www.asppa.org/News/Article/ArticleID/5554 The audit will be done soon, just not by Monday.

Any response?

Forget about 5500's, there's probably a "few more" 1040's that are hanging in limbo...

I'm surprised there is no relief yet or did I miss something?

Here is an example too. John takes out a $50,000 loan on January 15th 2016 and repays it in full on March 15th of that same year. John cannot take ANY loans until January 15, 2017. Sounds ridiculous but absent these rules, John could take out $50,000 and repay it every 12 months and continue to roll the loan and never actually repay it. The point of these rules is to avoid John essentially never repaying the loan.

You did not mention how long ago you were divorced, but it sounds like it was long ago. All I can think of is subpoenaing his tax records from the IRS so you can see if he received any distributions. But you need an attorney for that, but perhaps they will work on a contingency basis.

I'm a straight-up independent, no political loyalties one way or the other. It's just too damn bad I cant vote republican this cycle because for me this would have been a decisive factor! :wacko:

FWIW, I am absolutely telling my clients to file. Fortunately they are both in a position to pay me the $500 or so that I would need to charge to do the filing. It's an atrocity though that the fees involved here are thousands of times the correction involved (i.e. the interest)

WCC, were the amounts similar to what I have described?

I'll give em $30,000, but these amounts are way too small!! Must be a mistake!

There is no filing fee for the VFCP.

I've gotten two letters in two days from the Boston Office regarding late deposits reported on the 5500. The letter specifically says "it appears that the correction was not completed before the date of the filing of this form." That is false in both cases - the auditors schedule of late deposits disclosed that it was corrected outside of VFCP. The letter indicates that "prior to commencing any enforcement actions, please let us know if you will be filing under VFCP." By the way, did I mention that both plans have around $1MM of contributions a year and the late deposits disclosed were WELL below $1,000? One was just barely over $100. Anyone getting similar letters? I think that when they pulled the query something went wrong and these were sent out in error.

Belgarath, we do that all the time when there is lousy employee participation. In fact sometimes we just show it as an optional contribution when we send them the SH Match calc.

Do you think my last post is a valid defense? I could have stuck it to the employees under SCP hard-core.