shERPA

Thank you!

I’m 99% retired, but have a couple people I help take care of their EZ filing on their solo k plans. I understand the feds want the EZ to be filed electronically, and that this is apparently mandatory for many filers for the 2024 returns to be filed in 2025. But I’ve seen conflicting guidance where some say it’s mandatory if the plan sponsor files at least 10 returns of any type (e.g. payroll, tax, 1099s, etc) in a year, and other sources say this threshold is 250 returns in a year. Obviously this makes a big difference in who must file the EZ electronically. Can anyone help clarify this for me? Thanks.

So sorry to hear about Mike. I (Jim Norman) was fortunate enough to be a PIX sysop along with Mike. I learned a lot from him, he was incredibly generous with his knowledge. I also really enjoyed the occasions when we got together. He was one of the good guys. RIP Mike.

Right? That’s what I always said, why do we call it “the Service”? Didn’t even think about it when I typed the message, I guess it’s still resident in my mind from attending so (too?) many ASPPA conferences.

Ok, so after 40+ years in the TPA world I retired at the end of 2021. In 2022 I terminated my small solo-k which I sponsored as a sole prop for some side income, plan was alway under $250k. I rolled it to an IRA and in January 2023 I filed a 2022 EZ marked as both the first, and the final return. Today I get a letter 1072C from the IRS telling me that my EIN is XX-XXXXXXX and that I should always use this number in filing the EZ. Well, duh! Yes, I know that’s my EIN, that’s why I put it on the EZ form in the first place. I checked my copy, the number on the EZ is correct and matches the number IRS states in the letter as well as on the original EIN assignment letter I received years ago. The letter doesn’t say I have to do anything, and it acknowledges receipt of the 2022 EZ filing. So Whiskey Tango Foxtrot? I don’t recall any of my clients over the years getting a letter from the Service like this. anyway, just thought I’d put this out there in case some of you start getting client calls about such a letter. I think IRS has a special department to create correspondence designed to waste TPAs’ time. Definitely helps remind me why I was ready to retire (and enjoying it immensely, especially most days where there’s no IRS envelope in my mailbox!)

Those who like sausage and respect the law should not watch either being made.

This isn't specific to IRAs, etc. but is an estate close-out issue. Filing form 5495 to request an estate trustee's discharge of any personal liability after 9 months, I need to list and attach the returns for which this is requested, in this case forms 1040 and 1041. The returns are filed, the 5495 asks for the IRS service center where they were filed. 1041 was mailed to Ogden, but the 1040 was filed electronically. So in the service center box, should I put "filed electronically", or list the service center where the paper return would have otherwise been mailed? IRS instructions are very brief and don't address this. Thanks.

If he has no ownership, it's not a CG, nor can it be an ASG unless he's principally providing management services. That said, this could be a shared employee situation if the attorney is utilizing the firm's staff. It could also be some sort of de facto partnership if he has a profit interest in the firm (as opposed to simply a percentage of billing compensation). This sort of determination should be made by legal counsel. TPA points out the issues of an ASG and/or shared employees (IRC 414(m) and Rev Ruling 73-447. Then let the lawyers figure it out.

That's a joke, I say, that's a joke, son! I’ve never seen a document include language suggesting a participant go fly a kite either. Although it might have been fun to slip it into one BITD when we did individual DL submissions, just to see if it got thru.

But only if that’s what the plan document says to do.

Thanks Bill. Yeah I’m really trying to be retired, and being fairly successful at it. Just trying to wrap up a few things that started last year. As explained to me they originally had other plans for company C, but so far those plans have not come to fruition and they don’t expect this to change for a while. It’s possible C will just go away, or they just move the ees back to A for payroll, which would clean this up nicely. But we’re dealing with 2021 right now so we have to deal with it as it was.

A and B are a CG (100% owned by one individual), they want to establish a plan, all employees of both entities will be covered. A employs its staff thru a staffing company C. C is 50% owned by the owner of A and B (other 50% unrelated ownership), so it is not part of the A&B CG. C has absolutely no other functions. It pays A's staff and gets reimbursed by A, that's it. The employees are hired, fired, directed, controlled. report to, and in all respects managed by A. It seems to me that under RPs 2002-21 and 2003-86 that these C employees are common law employees of A only. In fact, if C sponsored a plan and wanted to cover them, it could not do so on its own. It would have to set up a multiple employer plan with A adopting to comply with the RPs. Question 1 - Do you agree so far? Now there is another company, D, that is a CG with C (80% ownership overlap by 2 owners). D has employees and its own 401(k) plan. It seems to me that since the "employees" paid thru C on behalf of A should be considered common law employees of A only, that A and B can proceed with their plan without regard to D. It also seems that D can maintain its 4k plan without regard to C, as C has no common-law employees. Question 2 - Do you agree with this? Any other thoughts? For the record none of these are service orgs. Thanks.

Entry age normal, RR 81-202, excess only integration allocations.

Listen to your friend. https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=44

No, I'm not nearly as creative or talented as Derrin. This came to me in a fit of inspiration after yet another prospect objecting to the plan design I was presenting by asking "why would I cover all these employees when I can do a SEP for myself?". But as for musical abilities I have pretty much zero. Have at it!