D Lewis

See this Link for a prior discussion: http://benefitslink.com/boards/index.php/topic/48332-late-deposits/#entry211802 The guidance is informal and never been confirmed that I know of, but we give the amount of the excise tax to the participants as extra lost earnings if the amount is small. Just don't ask me what small or de minimis is.

It's definitely 2014, 2015, and 2016 for you. My renewal was Sept 2016 and my CE years were 2013, 2014 & 2015. My last renewal before this (Sept 2013), I was confused by this and thought it was 10/1 to 9/30. I didn't have the right amount of CEs for the calendar years 2010, 2011, 2012. In fact I forgot to renew before the June 2013 deadline. It wasn't until I applied for my PTIN renewal in Dec 2013 that I realized. I called to ask what to do, and they made an agreement to take extra CEs then and apply. My ERPA was renewed - but just at a later time and I guess for the interim period (Sept 2013 until I got the renewal in early 2014), I was not allowed to "practice before the IRS". I was worried that I wouldn't be able to renew, but that wasn't the case. During this process and phone calls they confirmed the CE years were calendar. For my current renewal in 2016 I did everything correctly and timely. In November when I still hadn't received the renewal I called and they said it wasn't processed yet. They checked while I was on the phone and said everything was in order and sent the renewal out. The bottom line is they take your word for it on the renewal form, and we are supposed to have the proof in our files should they want to audit it. The CE tracker they provide is useless because one may have CEs that aren't reported there and they don't check that for proof when we apply for renewal (I think).

One our clients got a notice about 2013 - there was a box on page 4 for: "My business had no activity for the period above." We had them check that box and mail it back.

See this Link for a prior discussion: http://benefitslink.com/boards/index.php/topic/48332-late-deposits/#entry211802 The guidance is informal and never been confirmed that I know of, but we give the amount of the excise tax to the participants as extra lost earnings if the amount is small. Just don't ask me what small or de minimis is. The second part of the issue is the DOL. My understanding is that if a sponsor receives a letter from the DOL about late deposits (usually triggered by the question on the 5500), and if the sponsor has corrected the late deposits AND has paid the excise tax, the sponsor can get a letter of no action from the DOL without filing under VFCP. So if we do what the IRS informally said is ok, and give the excise tax amount to the participants, is that good enough for the DOL to get the no action letter, or do we now have to file under VFCP? I've talked to the DOL and sent them requested e mails on the topic. I don't think they know as they never got back to me except to say "that's a fascinating question".

Not to answer for Bird, but I am familiar with the case. The plan limits hardships to deferrals and rollovers. There are/were other employer sources in this participant's account (no rollovers).

Fascinating that this continues to be asked over and over - yet different answers are received. Since this is an IRS pub, it carries more weight. But at the 2011 Mid-Atlantic Benefits Conference in Philadelphia, this question was asked during the "Ask the Experts" session. Someone asked if there was a de minimis amount where one did not need to file the excise tax return. Someone else said that they had heard that if the tax was under $100 it did not need to be filed. George Brim and Michael Sanders of the IRS said there was no set number. But they clearly stated that if the cost to calculate, fill out, and file the 5330, PLUS the cost of the IRS to process it, if that cost was more than the excise tax, they didn't want it filed. Instead they said to calculate the tax, and add it to the lost earnings, and give it to the participants. FWIW, which apparently isn't much.

We just had our 2nd client get this notice with the incorrect dates - 2003 extended until 10/15/2004. Here is the real kicker - we did not file a 2013 extension for this one. It was filed on time back in April 2014! (yes I checked the EIN, plan #, plan name, and the confirmation of filing for those who doubt) I double checked the plan year ending 12/31/2003 since we were the TPA then as well. This client filed on time for 2003 also - no extension. (I also looked at the other client's 2003 filing since we did that one as well - the 2003 return for that one was filed with an extension). Bizarre!

yes I am sure - I double checked it. Plan year end: 12/31/2013 - requested extension to 10/15/14.

One of our clients just sent me a copy of an IRS notice they received dated 9/1/2014. We sent in a 5558 for their 2013 plan year (calendar plan year) in late July. The notice states it is for the year ending 12/31/2003, and the due date of the return is extended to 10/15/2004. Anyone else seeing this?

Or timing of distributions. If termination of employment is after the end of the plan year and ERD is immediate.

We have a participant who died in February of 2009. He was age 63 at the time of death. The beneficiary is a Irrevocable Trust. The Trustee of the Irrevocable Trust wanted to delay distribution until one of the beneficiaries of the trust attained a certain age. He now wants the plan to distribute the deceased participant's balance to the trust, but he does not want withholding. Since the 5 year rule states the distribution must be made by the end of the year which contains the 5th anniversary of the date of death, can this be considered a RMD? Is there any way that this distribution can be considered not eligible to be rolled over, and therefor mandatory withholding would not apply? Thanks

Yes he does have an existing traditional IRA, so the accountant has abandoned the idea. Thank you both for your help.

An accountant has asked me the following question, which I haven't heard before, and I am not an IRA expert. He has someone that files jointly and the employer does not have an employer sponsored plan (his wife's employer does if that matters). Their combined income is over the limits so that he cannot make a Roth IRA contribution. He can make a deductible regular IRA contribution, but he doesn’t want to. The question is, can he make a regular IRA contribution and elect it to be non deductible? If that is possible, he then wants to know if after the non deductible regular IRA contribution is made, can it be rolled to a Roth IRA. I told him if he is able to make a deductible IRA contribution, he could do that and roll it to a Roth IRA, but since the regular IRA contribution would be for 2012, and the conversion would be 2013, he doesn't want to do that. Thanks

Here is all we do:

See this thread: http://benefitslink.com/boards/index.php?s...st&p=211802 If you go this route, I don't think you file the 5330 at all - not to the IRS with $0 due, and not just a paper version kept in your file. At least we haven't done that.

I don't know what your 5330 is for, but at the Mid Atlantic Benefits Conference, May 5-6, 2011 in Philadelphia, George Brim of the IRS (Trenton) said that there was no de minimis for the 5330. But if it cost more for you to prepare the form and the IRS to process the form than he said they didn't want the 5330 filed. This was in direct response to filing a 5330 for late participant deferrals, and they said the amount of the tax still needed to be calculated and then given to the participants in the plan (in addition to the lost interest being put in) instead of the IRS. So if your 5330 is not for late deferrals, I don't know if it would apply. Plus it is informal guidance. The question I've asked before and nobody has responded to (because probably nobody knows) is if one makes the correction this way, will it also suffice the DOL? In other words, the DOL sends a letter sometimes regarding late deferrals that are reported on the 5500. If the plan sponsor has corrected by putting in the late deferrals, the lost interest and paid the excise tax, then the DOL will send back a letter of no action without filing under VFCP. If we rely on the informal guidance and put the excise tax into the plan instead of to the IRS, will the DOL still issue a letter of no action without having to file under VFCP?

At the 2011 Mid-Atlantic Benefits Conference in Philadelphia on May 5-6, the issue of the excise tax was discussed at one of the "Ask the Experts" sessions. Someone asked if there was a de minimis amount where one did not need to file the excise tax return. Someone else said that they had heard that if the tax was under $100 it did not need to be filed. George Brim and Michael Sanders of the IRS said there was no set number. But they clearly stated that if the cost to calculate, fill out, and file the 5330, PLUS the cost of the IRS to process it (who would know what that amount is?), was more than the excise tax, they didn't want it filed. Instead they said to calculate the tax, and add it to the lost earnings, and give it to the participants. What I wish I had thought of at the time, would be to ask about the DOL. My understanding is that if a sponsor receives a letter from the DOL about late deposits (usually triggered by the question on the 5500), and if the sponsor has corrected the late deposits AND has paid the excise tax, the sponsor can get a letter of no action from the DOL without filing under VFCP. So if we do what the IRS informally said is ok, and give the excise tax amount to the participants, is that good enough for the DOL to get the no action letter, or do we now have to file under VFCP? Not sure. edit to add the year of the mid atlantic benefits conferenece

Maybe I'm a little dense, or missing what you are saying, but why are you saying there must be a distributable event to deem the loan? If the participant stops paying it's either an actual distribution or a deemed one depending on if they have a distributable event. Regardless of the source of the loan, if they stop payment, we have to deem it at the end of the cure period - age doesn’t come into it - they stopped payment. You may not be able to offset it, but you must deem it. No?

How about a special amendment that brings in the wife and one or more NHCEs at the same time? Not sure how many NHCEs you need in this case without the demographics, but if they want the wife in so bad, it's the price to be paid to get what one wants.

I agree that the participant can take the in service and roll it over without a RMD provided the document doesn't say otherwise, and the particicpant is a NHCE. I know it's not the questions being asked, but doesn't that mean the there will be RMDs from the IRA since there is no provision to postpone RMDs in an IRA like there is in a QP? Not sure that was a result the participant was looking for.

Plus as mentioned before, 3E used to be "Prototype plan", and now it's used for "A one-participant plan" It's not just that 3D and 3E are now combined into 3D - 3E has a new meaning.

Thank you both for your replies. If the year is truly a calendar year, then since the circular clearly states that one must have 2 ethics CPE for each year, and any partial year counts as a full year, then I should have had 2 ethics CPE in 2009 since I was enrolled in September of 2009, and then 2 ethics CPE in 2010. I'm beginning to think that the ethics CPE requirement is disconnected with the renewal cycles. So it doesn't mean that I needed 4 by 6/30/2010 when I renew, but that I needed 2 in 2009 (which is too late), and 2 in 2010 through December. I'm going to make sure I have 20 total CPE by 6/30 as the fax I received stated. The memo did not mention how many ethics I needed, so I'll see if I can get my ethics total to 2 CPE by 6/30. I'll take some more CPEs in 2010 sometime and make sure some of that is ethics so that I have 4 total for 2010 (to make up for not having any in 2009), and not worry about it. yeah, that sounds like a plan! (who knows)

I am one of the lucky ones whose Social Security Number ends in 0, 1, 2, or 3. So I must renew my ERPA enrollment by 6/30/2010. I was enrolled 9/3/2009 and it expires 9/30/2010. I have read the Circular 230 regarding CPE credits for those enrolled during an enrollment cycle and am confused. For a regular 3 year cycle it is clear that one must have 72 CPE credit, and one must have at least 16 (including at least 2 ethics) each year. When one was enrolled during a an enrollment cycle Circular 230 states (page 9 - section 10.6 (e)(2)(iii)): I wasn't exactly sure what an enrollment year was for me. For part A, "In general", I figured that I had 10 months from 9/2009 to 6/2010 so that was 20 CPE that I needed. What I could not figure out at all was how many ethics CPE I needed. If the enrollment year was a calendar year (as defined in section 10.6 (e)(1)(i)), and any part of a year was considered a whole year, then I would need 4 ethics CPE. This made no sense to me as I have been enrolled less than one year. After a couple of attempts I got through to someone at the IRS, and I was not able to clear things up - it only made it worse as I don't think the person I talked to knows what she was talking about. First of all she said that first paragraph above ("(A) In general . . .") required that someone enrolled during an enrollment cycle had to have 2 CPE IN each month. So even though I was enrolled on 9/3/2009 and received my certificate and card sometime later that month, I had to have 2 CPE in 9/09, and then 2 in Oct 09, 2 in Nov 09, etc. I expressed that this didn't make any sense at all, but she was animate and said we would agree to disagree. That if I was audited, I could be sanctioned if I did not have 2 CPE in each month rather than 20 in the period 9/09 to 6/10. When I asked what I was supposed to about it now as there is no way to go back and get 2 CPE in each month, she said "can't you get them now before you renew?" Which of completely contradicts what she previously said - when I pointed that out, she said that they would accept the renewal, but again if I was audited, I could be sanctioned. I pointed out that the regular 3 year cycle does not require anything similar, that one just had to have 16 per year and 72 total, she referred me back to how the circular is written. She is clearly wrong about this, but it went no where. When it came to ethics CPE, she first told me I had to have 4 ethics CPE. I’ll spare trying to describe all of this part of the conversation as it was completely bizarre. I explained that I had 1.5 ethics CPE from a recent conference and didn’t know where I could get .5 more to get to 2 total, let alone 2.5 more to get to 4, by 6/30. I asked her if she could define what my “enrollment year” was (calendar or other wise) so I could figure out how many years were in my cycle and then determine how many ethics CPEs I needed. She said some things, but never was able to answer the question - I don’t think she understands it herself. She said “what would I like, would I like it to be 1.5?” I said “sure” and she said “OK”. After picking my jaw off the floor I still don’t know what that means or what I’m supposed to do. Then she said, “do you want the extension or not?” I didn’t know what she was talking about. She then said something like “well we knew for this first renewal cycle people would have difficulty getting the CPE by 6/30, so we’ve extended until 9/30." I felt like screaming “why didn’t you say this in the beginning?” That also contradicts her contention that we must have 2 CPE in each month. She then said she wanted to fax me an internal memo. The fax is a Policy and Procedures Memorandum dated 3/8/10 from the Chief of the Case Development & Licensure Branch. It states in part: But I’m lost in figuring this out. She told me on the phone that we had an extension to apply for renewal and get the CPEs, but the memo seems to say that we have an extension to apply for renewal, but he CPEs must be completed by 6/30. It appears that we have to certify what we have done and retain the records to prove it only if asked. Nothing needs to be submitted with the application to support that we have competed the requirements. I’m not even sure if I’m posting this to ask a question or just to make others aware of the issue. If any one has anything that can enlighten the situation I would sure appreciate it.

I don't have the practice test, but either you don't have the correct number, or you have a different version. Possibly they fixed the question. Look at the orginal post, yours looks like a similar question, but the facts and numbers are different, and the answers are different. For instance in the original post "B" was "II only" and yours "B" is "III only".

I have been using 2T with 2F and 2G when appropriate. Our software (Ft William) has not had a problem with it. I would be curious to know why Relius thinks it is an error. Seems like it should be fine and correct to me.