Janice F

Thanks. I did not realize that the forms are updated quarterly. I was trying to have my staff get an early start on these. Foiled again.

The IRS Form 720 was updated in March 2022; however, the dates and rates for the PCORI fee on line 133 were not updated (from $2.66 to $2.79). Does anyone have a work-around for this or how are you handling this? The service that we use is not allowing an override of the amount due. This is for Plans with a 12/31/2021 year end.

Is it possible to file under DFVCP without the required auditor report attached? 5500 was already filed and accepted w/out audit report. IRS has issued penalty notice but due to some very unique circumstances including a company merger, audit is just in the initial stages but IRS notice is coming up on 30 days. Would it be ok to have the plan sponsor/TPA refile the same 5500 (w/out audit) under DFVCP and then amend the 5500 again once the audit is completed.

Plan terminated and final short-year 2017 5500-EZ was filed (single/owner PS plan). All known assets were rolled over to an IRA in 2017. It was discovered recently in 2019 that 2 plan investments- stocks worth a fairly substantial amount - still exist. It was apparently discovered due to dividends being paid this year. These 2 investments were held outside the main brokerage account but per the client, were/are titled in the plan's name. Client wants to rollover these 2 investments now to an IRA. Due to the passage of time between plan termination and now, I'm thinking it would be a failed /excess IRA rollover. How do we fix this? Any ideas?

A client just sent us an approval of 5558 extension dated 10.21.2019 for the 2008 calendar plan year. 10 years too late.

I am assisting a client with current and all prior years ADP ACP testing back to 2007. Unfortunately, all prior years are failing so they are looking at having to make QNECS. They just informed me this morning that they are also working with ERISA counsel on filing a VCP for correcting late deferral remittances as well as eligibility /enrollment issues and will be remitting lost earnings for the late remittances as well as 50% of deferral plus the match for all prior years' eligible to enroll but not enrolled/not informed. The question is: do the current remittances by the Employer to correct the prior years' eligibility/enrollment issues impact the ADP/ACP testing and if so, which year? Is it the year the corrective contribution is made?

How does one determine if a discount rate used by the actuary is reasonable? Is there a reference source for acceptable discount rates? Thanks for any feedback you can provide.

We use ProFx for our 5500s. We efiled a 5500 an hour and a half ago and it is still not on the EFAST2 website. Anyone else having the same issue?

I see on the newly released 5558 there is a box to extend the new 8955-SSA form. Even though the date for filing the SSA has been officially extended by IRS (for both 2009 and 2010) to January 2012, we still have to file the 5558 to get the extension on the SSA filing? I also noticed that the extension request for the SSA has to be signed, unlike the extensions for the 5500. Is this everyone else's take on this? Seems like we will be doing alot of extra 5558s in the next couple of weeks.

We have a couple of June 30, 2010 plan year ends for which the audit and 5500 are still in process. They were extended to April 15th but does anyone know if they actually have until April 18th to file due to April 15th being Emancipation day????

Here is the situation: Determination of Top Heavy for 2010 (as of 12/31/2009), I have 2 persons who are 1% shareholders but did not earn the required compensation in 2009 to be Key Employees. However, these same individuals were also 1% owners in 2008 and did have greater than the required comp in 2008 to be considered key employees as of 12/31/2008 for TH calc (for purposes of the 2009 plan year). This is not a safe harbor and neither of the 2 individuals took a distribution in 2009. My question is this: for the 12/31/2009 test (which applies to 2010), are these 2 individuals included as Key EEs even though they earned less than the 150K comp requirement in 2009? I thought that they would be treated as 'former key employees' and their balances excluded from the 12.31.2009 test altogether. TPA is saying that because they were Key as of 12/31/2008, they are automatically KEY for the 12/31/2009 test in spite of the fact that for 2009 they both earning less than $150K.

We used to routinely submit reasonable cause letters and had very favorable results (penalty waived in 90% of cases). About 4 or 5 years ago, something changed and we were no longer getting those favorable results (either only partially waived or nothing waived) so we now recommend clients go the DFVCP route. We now submit RCL's occassionally and only when the client feels strongly about not paying the 'penalty' up front because they do feel they have a strong case for reasonable cause . . .but only about 50% are approved.

I have not received an acknowledgement in response to the last 2 reasonable cause letters sent to the IRS. The next thing the client / taxfiler received was a penalty notice. Anyone having similar experiences or know a possible reason that I am not getting responses to my RC letters?

Here are the facts: Employer maintains a single employer 401k plan. Employer decides to transfer all of its employees, effective January 1st, to a PEO (unrelated employee leasing company) and those employees (who are now employees of the PEO, technically speaking) are eligible / enroll in the PEO's 401k. The employer elects to merge the single ER 401k plan into the PEO multiple employer 401k plan, also effective January 1st. Unfortunately, the actual transfer of assets does not take place until February 1. Of course, all of the affected employees (now employees of the PEO) are leased by the single employer. There was no plan amendment to the 'old' plan to terminate, only an election to merge. Question: Does the 'old' single ER 401k Plan file a final 5500 for the one month period ended February 1st, and is that plan considered officially terminated? Or is is considered merely suspended or frozen?

If a series of substantially equal periodic payments are taken, then distributee avoids the 10% early distribution penalty. In researching this (trying to assist a client who may be subject to the 10% penalty that he already took in 2008), I found that there are 3 ways to calculate the distributable amount. My question is whether that amount can be exceeded? For example, if I use the RMD method and that results in a figure of $10,000, can the distributee actually take out $20,000 per year as long as he/she maintains that level for at least 5 years or age 59 1/2? p.s. Happy April Fool's Day to all my fellow pension fools.

Is a VEBA sponsored by a governmental unit exempt from filing a 5500? Having an audit by a CPA firm? filing a 990?

Employee dies in 2009, NQDC plan indicates his balance is to be paid to surviving spouse. Per 2009 IRS instructions, this now gets reported on a 1099-MISC. I think it goes in box 3 Other Income. Is the distribution subject to FICA, Medicare or SE (Self employment) tax? Any assistance is appreciated.

I believe that the excess deferral in the 401k plan was not eligible to rollover to the IRA, so I'm thinking that the $12,000 should be corrected by removing it from the IRA by April 15th to avoid the 6% excess IRA contribution penalty. But then is it taxed in 2009 when distributed from the IRA? Or taxed in 2008 when 'distributed' from the 401k since it never should have gone into the IRA in the first place? p.s. - although I am a CPA, I don't prepare 1040 returns. The 1040 person at my firm is asking me for advice since I work with clients on their 401k and DB plan audits and 5500s.

We are the CPA firm trying to complete the client's 2008 tax return. Client had an excess 401k deferral of $12,000 in 2007 (she participated in 2 different employer plans). We correctly included 12K as taxable wages on her 2007 Form 1040. We advised her to have the excess deferral distributed to her before 4/15/2008 to avoid 'double taxation'. Client failed to do so. Client then took a total distribution from her 401k, after 4/15/2008 as a direct rollover to her IRA. I understand that if she would have taken a lump sum distribution of her 401k balance during 2008 but after 4/15/08, she would have not have 'basis' and would have been taxed again on the $12,000. But what happens now that the money is in an IRA account? How can this be fixed and what are the tax implications? Also, what about the related match on the excess.

Thanks, Jim!

I have only a basic understanding of HSAs (I am a cpa) and client is asking me something that is beyond my knowledge base. Any help you could provide is appreciated. The specific question from my client is: "We have an employer with an insurance plan year of December - November. Their deductible was set at $1100 beginning December 1, 2008 through November 30, 2009. The minimum deductible amount changed to $1150 for 2009. Now, our system is telling us the accounts are not eligible because the deductible is too low. We contacted the employer (an insurance company) and they maintain their plan IS eligible and our information is not correct. Can you provide any guidance with this?" I found this quote in an on-line article but unfortunately no citation to accompany it: "Additionally, a fiscal year plan that satisfies the requirements for a high deductible health insurance plan on the first day of the first month of its fiscal year may apply that deductible for the entire fiscal year." Can anyone tell me if this is true and if so, what is the IRS citation (Code, Regs, Rev Ruling, etc.)?