Moe Howard

OK, now I get it. Thanks. Man I'm glad that's over with. I read IRS literature on the matter for two days straight. I'm tired. I feel light the weight of a 260 pound woman has been lifted off of my shoulders.

J4, Once again thanks for your comments. The document comes from a document provider (not a document sponsor). It is Columbia Management Investment Services Corp. The interim amendment failure is the fact that "the plan neglected to timely adopt the HEART Act by 12/31/10". I think our difference of opinion lies in the fact that you imply that the RAP for HEART began on 01/31/11 and will end on 1/31/16. And I think that the RAP for HEART already ended on 4/31/010. My belief that the HEART 6-year RAP cycle ended on 4/30/10 ... is based on my belief that since the plan's RAP for EGTRRA ended on 4/30/10, then the RAP for HEART would also end on 4/30/10 because both EGTRRA & HEART became effective during the same 6-year cycle. My belief, as stated above, may sound bazar .... but believe me, my friend, I'm trying to read this stuff and understand it as best as I can. My logic is probably flawed and I am not shy about showing my ignorance. I am not a benefits professional. If you could explain to me how you determined the begin & end RAP dates for HEART, then that will solve my problem.

J4, yes you are correct ...Heart was not required to be adopted by 4/30/10. The adoption deadline was 12/31/10. The importance of "4/3/10" regarding HEART, is that 4/30/10 was the date that the HEART RAP ended. HEART became effective in year 2009. The 6-year RAP cycle, that includes year 2009, ended on 4/30/10 for all types of amendments for any prototype plan. Since the 12/31/10 plan adoption deadline was missed, then the plan has 12 months from the RAP's 4/30/10 ending date to correct and pay only $375. But Sch 2 (rather than Sch 1) has to be filed because the VCP correction will be filed after the RAP ended on 4/30/10. If the HEART amendment had been adopted by its 12/31/10 due date to amend, then no correction would be necessary because the adoption would have been timely. The failure to timely adopt HEART, is a non-amender failure ...not because adoption was not done by 4/30/10, but because adoption was not done by 12/31/10. "Non-amender failure" simply means that "any" amendment was not timely adopted by the deadline to adopt it. Once this failure has been established, then the next step is to determine if the correction will be filed before or after the ending of the RAP cycle withinin which the HEAERT ACT became legally effective. Since the HEART Act became effective in 2009, then that positions it in the 6-year RAP cycle that ends on 4/30/10. Since today is 4/19/11 and since the correction will be filed in a couple of days ... then that means that the correction will be filed after the RAP ending date (namely 4/30/010). Since correction will be filed after the RAP ending date (namely 4/30/10) than Schedule 2 must be filed with correction. Sch 1 could only be filed in a situation where a adoption deadline due date was missed and VCP correction application was filed before the RAP ending date. If the correction is filed more than 12 months after the RAP ended, then of course Sch 2 still has to be filed .... but the fee is $750.

J4, "nonamender" applies to any amendment that was not adopted timely. Not only the amendments you listed above ....but also the HEART amendment too. I've been reading tax literature all day on the subject, but I have not yet hit the nail on the head. This plan was timely amended for EGTRRA on 1/01/09. But the plan was not amended for HEART by the 12/31/10 deadline for adopting HERO. It is my understanding that since the HERO amendment was not timely signed by 12/31/10, then the plan has only until the end of the RAP (namely 4/30/10) to file a VCP application with Schedule 1. Since 4/30/10 has already lapsed, then the only other option for correction is to file a VCP application with Schedule 2. Further,...If the VCP application with Schedule 2 is filed by 4/30/11 (that's within 12-months after the 4/30/10 RAP ended) then the filing fee is only $375. However, if filed after 4/30/011 - then the fee increases to $750. April 30, 2010 is the date that the RAP ended for all pre-approved plans, although the the many various types of amendments each have their own specific adoption deadline. That's the way I read it, but I don't trust my understanding of what I have read. I sure appreciate you thoughts and comments.

J4, so if the RAP ended on 4/30/10 .... then Schedule 2 (not Schedule 1) must be filed, right ???

J4, On what date did the RAP begin? On what date will the RAP end ?

J4, Both Sch 1 & Sch 2 can apply to interim amendments. Sch 1 applies if the "remedial amendment period (RAP)" has not yet expired on the day that the VCP application is filed ...and .... Sch 2 applies if the RAP has already expired by the time that the VCP is filed. So in order to determine which Sch (either 1 or 2) to file, I first have to know if the RAP has expired. I've read that the RAP for a pre-approved (prototype) plan is six years and that the begin date of the RAP has something to do with the last dight of the sponsoring employer's federal ID # (EIN). I have no basic knowledge about RAP rules and I am unable to understand what I have read about RAP. I do know that the plan uses a prototype document, last digit of EIN is "3", and that the HEART amendment was not timely signed. I had hoped that someone familiar with RAP rules, could tell me on what day the RAP begins, so that I can determine RAP expiration date (6 years after RAP begin date) .... and then conclude if Sch 1 or Sch 2 is appropriate.

I need to file a VCP application ... and I need some help. The HEART ACT amendment was signed by sponsor after 12/31/10, and then mailed to document provider. This error needs to be corrected. Last month several of you, at BenefitLink, directed me to Rev Procedure 2008-50 .... Thanks! Now I need more help. I realize that the HEART amendment was an interim amendment and that I need to complete Appendix F (Streamlined VCP Submission). I also realize that I am supposed to file either Schedule 1 or Schedule 2. (My problem is I can't figure out which Schedule to file). The last digit of the employer's EIN is " 3 ". The employer's tax year end is December 31. I am unable to understand the definition of "remedial amendment period (RAP)", but I understand that RAP is the key to my following question. Thanks Should I file Schedule 1 ... or Should I file Schedule 2 ? I would appreciate your help. Should Sch 1 be filed, or should Sch 2 be filed ?

The sponsor of an 8 partticipant (small employer) 401k plan ....signed, dated, and mailed its Heart Amendment forms to the Prototype plan vendor a few days late (after 12/31/10). Now the Prototype vendor is all upset and has the sponsor scared to death ...claiming that there are adverse tax consequences that may result. The Prototype vendor has also told the sponsor that that the Prototpe vendor can no longer issue the plan a customized summary plan description nor include the plan in future required amendments, because of the few days delay in signing the Heart forms. Is there a cheap way to fix things? Or ... is there "any" way to fix things ? Is it really the end of the world (as bad as the Prototype vendor makes it sound ?). Is there some kind of "second chance" IRS/DOL program that the sponor can apply to for self-correction? What would you suggest? Thanks

Soleproprietor has a MPPP. Owner/proprietor is the only participant. Owner does not want to contribute for current plan year. I told him that he must contribute 10% because it's a MPPP and the adoption agreement requires a 10% contribution each year. Does the fact that he is the only participant allow him to avoid having to contribute? Why should the DOL care if he contributes or not. It's not like some employee participant is going to complain. The reason I ask, is because I am preparing the Form 5500-EZ. Line 10, requests info about contribution amount if the plan is a defined contribution plan that is subject to the minimum funding requirements of Sec 412 of the Code. I don't want to falsely claim on the 5500-EZ that the plan is not subject to Sec 412 minimum funding. Does anyone know if there is some exception to the Sec 412 minimum funding requirement, that might allow him to not contribute simply becasue it is a single owner/participant plan ?

Tom, thanks. Now I understand. Neither my name nor my signature will appear on my clients' 5500. I'll have to obtain my own "filing signer" pin & ID from the EFAST2 website to electroniclly sign on my clients' behalf. I'll use that pin & ID # to electronically file clients' 5500, that I prepare. I'll use my name and persoanl profile data when I register for that "filing signer" pin & ID. Client's will have to sign a paper 5500, which I will attach to the electronic filing. ONE LAST QUESTION: I myself am an employer. I am the sponsor/administrator of my own firm's PSP. Can I use the same "filing signer" pin & ID # on my clients' 5500 (when I file on their behalf), that I use on my own 5500 when I sign as sponsor ?

Tom, are you sure that my name should appear somewhere on the 5500 hard copy ? I won't be wet-signing the 5500 hard copy. I will be entering the client's (filing signer) PIN & ID into the electronically filing process. The client has to wet-sign a hard copy of the 5500 and I have attach that wet-signed hard copy to the electronically filed 5500. When I register for a "filing signer" PIN & ID # do I use my name & personal profile data or do I use the client's.

I use CCH Prosystem-Fx to prepare income tax returns and a few 5500s. CCH will be the "Transmitter" of the 5500s that I prepare. I just received written authorization from plan's sponsor, giving me permission to electronically sign & file the 2009 Form 5500 on its behalf. Now I'm ready to go to EFAST2 online and register for PIN & ID numbers. Am I supposed to obtain a PIN & ID as "filing Author" and also a separate PIN & ID as "filing Signer" ? What name (my name or employer/sponsor name?) am I supposed to register the "filing Signer" PIN & ID under ?

What happens if employer refuses to contribute a SIMPLE Match, for his employees? Is there an excise penalty he must pay? If yes, what IRS Form must he use to pay it? Must the employees sue the employer to get the match ? What punishment will be administered by the IRS ... upon the plan, on the employees, or on the employer, if the employer simply never contribues the match ? The employer is a corp. The plan year is 2008. The match was due by 9/15/09. Is the employer allowed to contribute the match "now" (in Oct 2009)? I would think that a late match is better than no match at all. Is there a penalty or ramiifications for contributing the match after its due date ?

A small employer with only 3 participants in a PSP goes ot of business. Each of the three participants still have an account balance in his/her PSP account. The business no longer exists, the former owner has moved to Flordia, and the three plan participants have found employment elsewhere. I realize that plan still exists because it has assets. The three participants seem to have no desire to request a distribution. And the former owner (who is also the sponsor/ administrator) tells me that he does not have to file any more 5500's because the business no longer exists. Can anyone tell me the consequences to the owner (fiduciary) if he fails to continue to file 5500's for the PSP, as long as the PSP still has assets? I want to inform (scare) him into realizing that just because his business has closed, he still has fiduciary duties. The owner tells me that the plan automatically terminated when the business closed. He is wrong, isn't he ? Also, would the $1,000 per day penalty for not filing have to be paid personally by fiduciary or from the plan's assets? Thanks

Sieve, thanks. So, since he enterd the plan in 2008 and worked more than 500 hours during calendar year 2008 ... then he must share in the allocation of the 2008 PSP contribution, even though he worked less than 500 hours during 2008 while being a participant. OK, I understand now.

Per adoption agreement. 1. Calendar year PSP (Standardized Plan) 2. Eligibility requirements = 1 year & 1000 hours 3. Entry dates allowed = 1/1 and 7/1 4. Must receive allocation in employment termination year .... if worked 500 hours during plan year or employed on last day of plan year. An employee was hired on 4/1/07 and then worked well over 1000 hr during eligibility period (4/1/07 - 3/31/08). The employee entered the plan on 7/01/08. The employee quit on 8/ 10/08. During the period 1/10/8 - 8/10/05, he worked 1,160 hours. But during the period 7/01/08 - 8/10/08, he only worked only 200 hours. Now, here are my questions: In order to be allocated some of the 2008 PSP contribution .... does he have to have worked 500 hours during the period 1/10/8 - 8/10/08 ? Or during the period 7/01/08 - 8/10/08 ?

At Wal Mart near Korea Town @ LA, Califirnia

PensionPro, thanks. But now I have another question ..... the Form 5500 has the calendar year in bold print in the top right side corner of page 1. I guess that I could mark that bold calendar year out with a pen, but the Form 5500 is machine read. So, if I prepare 10 years of returns (1997 - 2006) all on a separate "2007" Form 5500 .(with the "2007 scratched out)... Won't that confuse the IRS machine that reads those 10 Forms 5500 ? The client thinks I know what I'm doing and I'll look stupid if the DOL sends the 5500s back because I marked out the "2007year", but should not have. If the client doesn't pay me, then I won't be able to pay the minimum payment on my credit cards this month.

I would like to file a buch of delinquent 5500's (small plans 1997 - 2007) ... but the 5500C/R series was discontinued many years ago. I would like to file all of them using the most current version of Form 5500, even though years 1997, 1998, 1999 were originally required to be filed on a Form 5500C/R. I heard a rumor while standing in line at Wal-Mart that the IRS now allows old delinquent years to be filed on the most recent current version of Form 5500 (rather than 5500C/R) if those old years are filed under the DFVCP program. Since I have had bad luck from acting on rumors in the past, I thought someone at BenefitsLink might know if the rumor is fact or fiction. Thanks

I would suggest that you try your best to get a copy of your wife's medical plan's Summary Plan Description (if the medical plan is not a federal government plan). Then read it and educate yourself on the terms & rules of the medical plan regarding a situation like yours. Only after you make yourself knowledgeable about the plan's rules, can you then decide how to proceed. You should also call the US Department of Labor (Employee Benefits) and explain your situation.

IRA is correct.... the plan should keep the money. Who ever heard of a business voiding old outstanding checks and giving those $funds to the state?

GBurns is correct ..... no economic substance. It would probably work if each partner's guaranteed payment was based on his production.

1. The following are the players in a fully-insured group medical plan. Association (the policyholder) Member of the association (an employer) Participants (employees of Member) Insurance company TPA (claims administrator ...hired by insurance company) PPO QUESTION: Which of the above is a fiduciary of the plan? 2. Another Question: Participant received medical services. TPA processed the claim. TPA tells participant that TPA mailed an EOB to participant timely, but participant cliams that he never received the EOB in mail. Participant calls TPA and requests TPA to e-mail a copy of that EOB to participant. TPA says it can't e-mail a copy... but will mail it again. Participant never gets it in mail. Participant calls TPA again and TPA accuses participant of being rude and hangs up on him. How in the world is participant suppose to get the EOB? Does DOL even require that he must be given an EOB? Who has jurisdiction over requiring that an EOB be furnished to participant .... (DOL, State Insurance Dept, ???)

In 1996 a small employer (actually he's not short ... he's about 6' 2') .... told his personal life insurance agent that he wanted to establish a retirement plan for his employees. The insurance agent, who of course knew nothing about rertirement plans, immediately smelled a commission. And before the small employer could say "who's looking out for me" ... the agent had hooked him up with an insurance company's prototype plan. The agent loaded him down with all kind of forms to fill out, gave the employer the 800-phone number of the insurance company's customer service department ( located 2000 miles away) and then ran home and waited for his commission check to arive in the mail. The insurance company was completely automated so the employer delat with them via phone and by visiting their website. Sometimes the would call the ins agent and ask him to explain things like .... "Buba quit yesterday and his wife is down here at the shop wanting to know about Buba's retirement plan .... what should I tell her?" To make a long story short, the insurance company has performed all IRS & DOL compliance requirements for the plan except two things 1) no discrimination testing & 2) no 5500 preparation. At the present time, the IRS & DOL do not know that the plan exists, because a 5500 has never been filed (not ever). The lady, who prepares the employer's corp tax return , recently went to a tax seminar and accidently learned that a 5500 is required. Neither the employer nor ins agent knew what a 5500 was (although this 401k plan has existed for the past 12 years). The employer has contacted me (an outside accountant and preparer of small 5500's) to determine what needs to be done regarding 12 years of delinquent 5500s. I was recently told by the insurance company that ... the insurance company does not prepare 5500s and that the employer should have hired a TPA firm 12 years ago. By the way, the insurance company does not have much in the way of plan records prior to 2004. I'll bet all hell is going to break loose when IRS & DOL receives the 2007 Form 5500 that I just prepared that has a plan effective date of 01/01/96. No records exist prior to 2004 to prepare 5500 for plan years 1996- 2003. Any suggestions on how to deal with penalty notices that are sure to come ?