Bird

While they might have effectively been after-tax due to the improper filings, I don't think the plan can treat them that way, especially if the plan didn't permit after-tax contributions, which is probably the case. I think you're doing all that is possible by amending the open returns to claim the deductions. (But it's a good creative thought...)

I've always thought of a SEP as a vehicle to get money into an IRA. 408(k) starts out... 408(k) Simplified Employee Pension Defined. - 408(k)(1) In general. -For purposes of this title, the term “simplified employee means an individual retirement account* or individual retirement annuity* - *these are defined in 408(a) and 408(b). So, I think the account that is being rolled over is in fact a 408(a) or 408(b) account.

Educated guess? Get the participant to sign a statement saying "I contributed X dollars on a pre-tax basis?"

I think it is a problem for a SIMPLE, not a SARSEP.

I thought it would "just" mean that deferrals for that year must be returned; see IRS website below. It is very specific on that point. I'm not sure what happens when the are returned after 2 1/2 months though; maybe that's the question. I would think they would be telling you that, no? IRS SARSEP page

Whatever is easier, with a current date.

ditto. The 15500 and 46000 entries wouldn't be possible if he was only covered by one DC plan, but with two companies/plans it is ok.

It's a maybe. From a document standpoint, it may be done by the end of this year. From a cutback of benefits standpoint, it depends. If a QNEC is hardcoded into the document, i.e. the plan says QNECs must be made if the ADP test fails (unlikely to have that restrictive language), and the change results in a reduction of a QNEC that would otherwise be paid, then it's definitely a prohibited cutback. If the change just results in a lesser refund (or greater)...I don't think they've provided that detailed of an answer. I don't think of a refund as a protected benefit and I think the IRS was more concerned about the first scenario (hardcoded QNEC) in more of a theoretical sense; maybe others know the 411(d)(6) rules better than I do and will have a more definitive answer.

I agree, there's not much you can do now but leave it in. It's not the plan's problem. This should have been picked up when she prepared her taxes each year. I don't know if there was a reporting problem on the W-2s or it just wasn't noticed; I would think the IRS has a system for catching excess deferrals and would have found it by now, so it does make we wonder if the W-2s were correct. Or, if she was a partner and took the deduction on her 1040, it's very likely that no one would know any better...and that, if the returns are not amended, that it will never be known.

OK, with the new info/confirmation that this really is an EZ filing, and no funding issues, I agree with Mike's comments. You can probably get this late filing issue* resolved yourself; just don't take "no" for an answer. Was the CPA seriously saying that your mom should write a check for $12,000+ without trying to fight it at all? Wow. *Some other potential issues come to mind, like "was the document amended for current law and regs before the plan was terminated?" I'm not sure that any "fix" for that now would be effective anyway.

I think if it is not reportable on Schedule A then it is not reportable on that line. It has something to do with the "...provides some or all of the benefits under the plan" language and the theoretically different nature of an insurance company providing guarantees. Of course we all know that when the money is held in separate accounts, there are no guarantees, and that's the norm rather than the exception, but...whatever, there's really no point in trying to understand why they ask the questions they do. I don't think the NW trust product commissions are reportable there. But if there is a Schedule A then yes. Definitely not for straight mutual fund products.

You say the plan was established as of 1/1/2010 but the transfer was credited on 12/31/2009, which is problematic. I'm not sure it's the end of the world though; if the first plan shows the assets leaving on 1/1/2010 for reporting purposes and the new plan shows them coming in on 1/1/2010, I might let it go at that. The effective date of the transfer of assets should have been coordinated better with the plan effective date...I guess I'd want to see the transfer instructions to see if they said "do this as of 12/31/09" (which would be wrong) or if they just said "do this" and Fidelity took it upon themselves to assign a 12/31 effective date. I'm not really sure how you would "fix" it anyway; you can't retroactively make the second plan effective in 2009...and really, you're just talking about dates that show up on a piece of paper; it seems that any physical transfers occurred in 2010.

Good luck with this; here are some thoughts/questions... your first post says it is a "no employee" filing (5500-EZ) but later you say a 5500, not 5500-EZ was required - why do you say that a 5500 was required? The rules are (generally) that a one-man plan doesn't have to file if under $250K, a one-man plan files a 5500-EZ if over $250K, and all other plans file a regular 5500. If it's a 5500-EZ filing then you're only dealing with the IRS; if it's a regular 5500 then you have to deal with both the IRS and DOL (Dept of Labor) and that makes it more difficult. Most of us have seen the IRS abate any and all penalties for late 5500-EZ filings (eventually). What's that all about? Was this a plan with a required contribution that wasn't made, or are we simply talking about a late filing? You probably should get a pension professional to help you finish this off. It's pretty clear that the CPA doesn't have specific knowledge in this area and you're just going to be spinning your wheels if you try to get her to take care of it. If you otherwise have confidence in the CPA, you can ask her if she knows of a good pension professional who could assist further, but it seems like she should have gone in that direction already (although "tax season" could be a legit excuse for not giving it full attention). You could check your local business listing under "pension and profit sharing plans" - try to find someone who provides "consulting" services; the letters "QPA", "CPC" and/or "MSPA" after a name is an indicator of some higher level of experience (they happen to be designations from an organization I belong to, the American Society of Pension Professionals and Actuaries, and there could be others without those designations who are just as knowledgeable). Again, good luck, and feel free to write back.

If it's within 180 days of receipt of the tax notice, then I think it's ok to go with the original election, and we do that. If it's over 180 days and a small* amount, we'll do it the same thing anyway. If it's a large* amount, we'll re-do the forms. *Definitions might depend on how the day is going...

I disagree with the sentiment, although there is some truth here. There are some 529 plans that operate as "black boxes" where there is no track history for the fund because it is newly created for just this purpose, and you might indeed have little control - I would stay away from them. But there are others where the 529 is just a "wrapper" option for funds that are otherwise sold in regular taxable accounts, and you can make changes (possibly limited to once per year, but that's really not a big problem, IMO) and to call these "gimmicks" or "new financial packages" is simply inaccurate. It's no different than having the option to buy fund X in an IRA vs. in a regular taxable account.

3.6.3 Mine has always checked automatically and asked if I wanted to update. I think you can go to Help, Check for updates.

If push comes to shove, is the plan going to sell other assets to pay off the mortgage? That seems unlikely, and I doubt that the other assets are collateral, so I doubt that the lender is ever going to get more than the value of the land in the event of foreclosure. Since the asset (land) has been (properly) re-appraised, I wonder if the liability (note) should be re-appraised as well? Just a thought...

The "for such preceding year" language doesn't bother me; I think it's just referring to the fact that that's the year you're looking at. I don't remember PPA saying anything about this. (And I don't think you're crazy.)

I think the relevance of the caveat in this case is that an employee could accrue rights to a QNEC contribution, if made, prior to 12/31. If your QNEC allocation has no service requirement, then an employee who is an NHCE as of 1/1 under the terms of the plan at that moment has accrued rights to a QNEC allocation on 1/1, and changing that employee to an HCE by virtue of an amendment making the top paid group election is a prohibited cutback. Honestly, I have a hard time arguing against that. Likewise, if your QNEC has a 501 hour requirement, then you could amend until someone has 501 hours. If the QNEC has a last day provision, then you could amend up until the last day of the year.

That gets rounded off in my records and I don't even say anything about it to the sponsor.

ASPPA asap 2010-06 reported that "The IRS has informally indicated that it would accept the 2008 Form 5500‐EZ (mailed to IRS in Ogden, UT as noted below) to report 2009 plan year data until such time as the 2009 form is made available." *I* would only do that for a short year that is due, but I haven't seen anything that says you cannot use it for a full year right now.

Yes, spouse is an HCE. What you see is not that uncommon, especially with large companies with centralized processing centers. If the client doesn't check a box properly, no one will ever know. The last two plans I looked at that were serviced by a large payroll company had this error. (One client decided to stay with them because they liked their testing results better than mine!)

Talk to the investment company handling the assets. They should allow the sponsor to sign an application on behalf of a missing participant.

I don't remember doing any of these recently, but we've always had success getting the penalties waived for EZs. Include a letter with the filing, and be prepared to send it again if they ignore it or appear to reject the plea for waiver. It sometimes takes a couple of tries.

I agree. I might be willing to issue a corrected 1099, but the payee could take the position that they accurately reported what they did, and what happened afterward is out of its control and there's no need to do a correction. And if the participant reports it as income, that's what matters.