austin3515

By sending the client the corrected 1099-R that is precisely what I am doing. I do not have to advise them of the consequences of not doing what I ask. I presume they will do what I instruct. "Dear client - the 1099 was inaccurate or no 1099 was filed. Please file the attached [corrected] 1099-R and prepare your amended tax returns accordingly oh and by the way enjoy the rest of your summer!" I've met Circular 230, have I not? In the example I gave I have zero obligation to find out if they complied with my instructions.

Here is what I like about Bird's suggestion. Let's presume I am required to do the 1099, because as a risk averse person that is what I would like to assume. If I prepare the correct 1099 then no one can suggest I was complicit in any bad decisions made by a taxpayer. If I prepare the 1099 correctly as a THIRD PARTY and the Plan Administrator decides not to (or forgets) to file the 1099-R, that person bears the responsibility of their own decisions. I have complied with any reasonable obligation that someone might think befalls me. I am not legally obligated to file tax forms on behalf of a client. I am merely preparing a tax form for which it is their responsibility to file, even though I might for some other clients file that form electronically. Again, I am trying to figure out the minimum threshold for me comply with the paid preparer rules. It seems to me I cannot be penalized for preparing an accurate form for the client to file if the client is the one who chooses not to file.

That's quite brilliant actually. I think what it comes down to is at that end of the day I am a THIRD PARTY. If a client doesn;t want to file the 1099 I prepare, then that is on them. I have fulfilled my responsibility. It seems inappropriate for me to do something without my client's express permission because I serve at their direction. Thoughts?

Getting a good question from an auditor about our loan provisions. Admittedly they don't fit well with the TIAA-CREF bazaaro loan policies. Anyone have any thoughts on how to handle? "Participant directed" election includes a statement in the loan program that all loan payments will be applied to participant accounts. If I don't check that box it says loan payments will be applied as earnings to the general trust fund. Maybe I just edit that and say it's applied to the TIAA TRaditional Account. Anyone run into this before?

OK I change my answer. You are "permitted" to disregard the match but clearly you don't have to. (6) Plan must satisfy ACP with respect to employee contributions. If the plan provides for employee contributions, in addition to satisfying the requirements of this section, it must also satisfy the ACP test of § 1.401(m)-2. See § 1.401(m)-2(a)(5)(iv) for special rules under which the ACP test is permitted to be performed disregarding some or all matching when this section is satisfied with respect to the matching contributions. See § 1.401(m)-2(a)(5)(iv) (iv) Matching contributions taken into account under safe harbor provisions. A plan that satisfies the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for a plan year but nonetheless must satisfy the requirements of this section because it provides for employee contributions for such plan year is permitted to apply this section disregarding all matching contributions with respect to all eligible employees. In addition, a plan that satisfies the ADP safe harbor requirements of § 1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4 percent (3 1/2 percent in the case of a plan that satisfies the ADP safe harbor under section 401(k)(13)) of each employee's compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees.

But would it be enough to say "Plan Admin, you gave us bad data, and as a result the 1099-R I issued is incorrect" and let them deal with it? Or do I have an obligation to correct it? I wouldn't think who is at fault would affect my obligations; I presume it only matters that we know an error occurred.

Our contract is definitely silent on the 1099-R's.

You don't qualify for the ACP Safe Harbor if you have after-tax. Now if you said you qualified for the safe harbor and you don't then you've got a document problem.

Example. Client took a taxable distribution in 2015 from a brokerage account which we did not know about until recently. What is our responsibility to provide a 2015 1099-R? Assume they have already filed their taxes and assume the amount is "significant." And assume we prepare their 5500. Does the answer change if the participant took 2 taxable distributions, and we reported one but not the other (and therefore a corrected 1099-R would be required). I think it is perhaps different if we learn that the form we actually filed is not accurate). Obviously the practical answer is simple: Do the corrected 1099 and do the amended 1040. That is NOT my question. My question is directed at understanding what our legal requirements are under the paid preparer rules.

I just think they need a carve out, even for plans with less than 20 participants with balances.

WE have a ton of plans on Fidelity's small non-prototype platform. But guess what? There is nowhere for them to go. Well, that is other than an insurance product with expenses of 2%+. Or I'm sure the employer would be happy to spend the $750 out of pocket for RK Direct (a sweet platform of course, but out of pocket is bad...).

Absolutely! But honestly some of these new requests are ridiculous. I'm not opposed to change. I'm opposed to regulators who possess not the ability to view the world from a vantage point of practicality and reality.

back up now, agreed. Thanks.

Let's see how many sponsors just say "you know what, never mind. I'll just terminate this thing." Tell ya one thing, I am all over pooled plans now... They are regulating these participant directed plans to the grave, literally...

http://us.practicallaw.com/w-002-7791 Well this sucks... New Information for Retirement Plans The proposed regulations would also add new questions to the Form 5500, Form 5500-SF, and Schedule R on participation, contributions, and asset allocation by age, and participant-level diversification. Questions include the number of participants: •Making catch-up contributions. •Investing in default investment options. •Maximizing the employer match. •Deferring compensation. •With account balances as of the beginning of the plan year. •That terminated employment during the plan year that had their entire account balance distributed.

Not one of my clients wants to part with $12,000 unless they have to.

Anyone having the same problem?

I nominate Tom! Sell it on Audible!

I have to say Tom, once they let that cat out of the bag it would seem to me there would be a clamoring to get that effective 1/1/2017. OF all the changes, this seems to be the one that would be limited to changing 5 or 6 words in the instructions. No new technology, no revisions whatever to the form itself. Instant relief. I hope ASPPA pounces on this!!

Any word on when this would be effective?

WOW... WOW... This is HUGE.

That was on page 772

That's a fascinating question actually. It seems to me it is an individual protection though and not to non-human enterprises. But then again I do not include J.D. in my listing of credentials and rightly so! "No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

Oh. My. God.

Oh. My. God. You have to guess how many pages it is before you actually open It. It will be more fun that way! https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-14893.pdf