Peter Gulia

If it gets to examination, a typical IRS examiner won't like arguments of the kind I described above. But the ideas can help in a few ways: If an employer won't do a correction, a lawyer's memo might help the employer take tax-return reporting positions assuming the plan remains tax-qualified. If something is examined, reliance on the lawyer's memo might support a defense that the employer did not knowingly or recklessly file a false tax return. Even if the IRS's examiner and her supervisor don't like the story, it might be enough that the difficulties, expenses, and hazards of a dispute motive a supervisor to close the situation with a negotiated sanction smaller than what otherwise might have been. Of course, it helps if the facts are better than those you described.

I missed a word in post 7; it should refer to considering whether a time limit is reasonable under ERISA sections 413 and 503. The evaluation also should consider whether the communication and the procedures are reasonable. Nowadays, a paystub often takes the form of an automated e-mail. Perhaps a notice of the kind GMK alludes to (which a panel of First Circuit judges considered necessary in particular circumstances) could be included in payroll's e-mail.

Among some ways to appease a customer's request of this kind: Try putting in the service agreement: "TPA, at its expense, shall be bonded to the extent required of the TPA under ERISA section 412." That might allow a customer to believe it obtained a contract promise, while also allowing the TPA to believe it meets that obligation by doing nothing (if the TPA is confident it never handles any money or other property of any employee-benefit plan). Another way: Find a friendly insurer (with an intelligent underwriter, a smart actuary, and a smart accountant) that will issue a fidelity-bond insurance contract with a coverage limit of $1,000 (which the TPA believes is more than ten percent of the amount handled) for a minimum premium. IhrtERISA, how confident are you that the TPA never handles any property of a plan? Have you considered the possibility that a plan's records might be the plan's property?

Thanks, rcline46.

I assumed you were thinking of tax disqualification, and not worrying about the Labor department's or a participant's enforcement of ERISA. Rather, I mentioned the ERISA provision because some facts might support a tax-law argument that the in-operation administration of the plan was consistent with the plan's terms because the written plan was more than only one writing. Another try: After one considers the base plan's provisions about what the sponsor must or may do to amend the plan, is there an argument that the notice (4%) was a plan amendment?

A person that acts as a plan's sponsor, a plan's administrator, or (often) both might consider a time limit is reasonable under ERISA sections 413 and 503.

Some employer/administrators treat an employee's acceptance of a Form W-2 without objection as the employee's approval that she was paid what she was entitled to (and also did not get more income than she expected).

ErisaGeek, thank you for your help. The owner's reasons for separate plans include: (i) not needing an independent qualified public accountant's audit; (ii) using different recordkeepers for different workforces; (iii) separating and containing some fiduciary liabilities at each corporation; (iv) making it easier to unravel employee benefits on a sale of a business. Any other BenefitsLink mavens want to explain traps to watch out for in using separate plans while relying on a safe harbor?

Was "the plan document" signed before or after the plan's administrator sent the notice? Does anything in "the plan document" treat the notice as incorporated by reference or otherwise made a part of the terms of the plan? Consider that what you think of as "the" plan might not be the only one of possibly several "documents and instruments governing the plan[.]" ERISA section 404(a)(1)(D).

A business owner owns 100% of the shares of each of four corporations. She assumes that the four corporations are one employer within the meaning of IRC section 414. The owner wants three of the four corporations to establish and maintain separate retirement plans. (The fourth corporation employs only nonresident aliens, all of whom have no U.S.-source income.) To meet nondiscrimination rules, each of the three plans will provide 401(k)/401(m) safe-harbor matching contributions. Is there anything in the safe-harbor rules that precludes the section 414 employer from using several separate plans to meet the safe harbor (assuming all plans have sufficiently identical provisions, at least on points relevant to the safe harbor)?

GMK, thank you for confirming my thinking.

A relevant rule states: "No tax is imposed under this section on any excess contribution or excess aggregate contribution ... to the extent the contribution (together with any income allocable thereto) is corrected before the close of the first 2 1/2 months of the following plan year[.]" 26 C.F.R. 54.4979-1©(1). A plan's administrator might want its lawyer's advice about how to interpret the sentence's use of the word "corrected". And if the word "corrected" might be interpreted to follow the statute's use of the word "distributed", an administrator might want advice about interpreting the meaning of "distributed". Might it might something different than paid? All that said, I don't doubt anyone's description about what an IRS examiner might do. But is there room for a plan's administrator to find "substantial authority" (within the meaning of 26 C.F.R. 1.6662-4) for a reporting position that no excise tax is due?

I understand that a Cycle A plan may do a remedial amendment now (through January 31, 2017). But what happens after 2017? Must a plan's sponsor do a plan amendment for every year for which there was a plan change?

And for a limitation year that began or begins on or after July 1, 2007, the 2002 ruling’s principle is included in the annual-additions-limit rule. 26 C.F.R. § 1.415©-1(b)(2)(ii)©. The key driver is that there is “a reasonable risk of liability”.

An employer has an EIN ending in 6. Its ESOP has a determination letter dated April 2014. So far, no one offers a useful prototype or volume-submitter document to restate the plan on. If concerning an individually-designed plan an Internal Revenue Code change makes a tax-qualification amendment necessary (and Congress's Act doesn't provide a special remedial-amendment period), when must the plan's sponsor complete the amendment? According to the regulations' ordinary remedial-amendment period without an extension or other administrative grace?

What happens if an employer responds to CMS (truthfully, one hopes) that the employer lacks requested information and is willing to cooperate with CMS's effort to obtain the information from the source of the information?

If one assumes, hypothetically, that those of the trust's terms that are different than the preceding document's terms are ineffective, might the remaining plan and trust terms be sufficient to state a plan that meets all conditions of Internal Revenue Code section 401(a)?

Professor Wolk's selection is designed to accompany a coursebook, whether his or Professor Medill's, for a law school's course on introduction to employee benefits. Many practitioners use the CCH/Wolters Kluwer sets described above. Among other advantages, a rule or regulation usually is placed just after the ERISA or Internal Revenue Code section the rule or regulation interprets. (EBSA's interpretive bulletins, which (because they are reprinted in the Code of Federal Regulations) CCH treats as though they were regulations, don't get a perfect fit because their CFR numbering isn't keyed to ERISA sections. Also, bulletins interpret several ERISA sections.) If you're buying now (before the 2016 edition is available), call a sales rep to ask if on buying the soon-to-be-outdated 2015 edition CCH will give you the 2016 edition without another charge.

Is the rule you're thinking of 12 U.S.C. section 1701j-3(d)(8)? https://www.gpo.gov/fdsys/pkg/USCODE-2014-title12/pdf/USCODE-2014-title12-chap13-sec1701j-3.pdf If so, its exemption doesn't apply concerning every trust but rather a trust that meets (at least) the two conditions stated by the statute. Just curious: How is the retirement plan's trust affected by the application or non-application of a mortgage's due-on-sale provision?

Concerning a proposed change under a cafeteria plan (which does not necessarily follow through to other matters), the plan's administrator might ask for its lawyer's or other tax practitioner's advice about whether the participant's claim sufficiently describes "[a] change in the place of residence of the [participant's] spouse" within the meaning of 26 C.F.R. 1.125-4©(2)(v).

Perhaps this is an opportunity for BenefitsLink readers to ask ourselves a professional-conduct question: If a retirement plan's sponsor prefers not to correct the plan's tax-qualification defects, may a practitioner: (1) inform his or her client about the exposures, risks, and consequences [see 10 C.F.R. 10.21]; (2) insist that the practitioner will not sign or otherwise be associated with a return or report that is less than complete and accurate; (3) do nothing else (if his or her client does not ask for further work)?

Beyond the IRC 414 and other issues that Doctors Group considers, each of the four workers with the corporations that are not shareholders of Doctors Group might ask for his or her lawyers' advice about the possible applications of Internal Revenue Code sections 269A, 482, and 7701(o).

If "there is no cash in the plan", what are the plan's remaining investments (beyond the loan receivable and the claim for restoration and disgorgement on the prohibited transactions)?

Does the plan provide trustee-directed investment or participant-directed investment? If it's participant-directed, how confident are you that the plan's fiduciaries could prove all conditions needed to support an ERISA section 404© defense? Would the fiduciaries' position be weakened by a participant's allegation that, for many quarters, she had not received statements, and that the plan's administrator had actual knowledge of non-deliveries?

Consider that a choice of January 1, rather than December 31, might have been a considered choice. For an analysis of exactly when the seller became no longer an owner, one might consider affected taxpayers' logical consistency of positions across all tax treatments.