shERPA

Rhonda Migdail of IRS said from the dais that they believe it is reasonable to take the position that all of the regular plan notices, distribution paperwork and/or periodic benefit statements provide the information necessary. She said a "technical reading" would require that the SSN also be included, but in light of all the concerns with protecting SSNs that they are not going to require this. So no additional individual statement required.

If a client hasn't provided the info, then DVFC is the next step. And the pain of writing that check will help them remember to get the info in timely next year. Would your tax accountant prepare your 1040 for you without your W-2 information? Would YOU sign a government form under penalty of perjury, knowing the information is not correct? If you're not willing to sign it that way, you shouldn't prepare it for your client either, IMHO.

Resign.

Request the funds be returned to the plan. If the funds are not returned to the plan, nothing can be done to force the participant to do so. Document that the request was made and followed up on. Also document what changes are being made to internal procedures to avoid this occurring in the future. That's about all that can be done.

I have never had DOL audit a plan where we did DFVC. And we've done quite a few of them over the years.

Look at the fee schedule in RP 2008-50 for Audit CAP non-amenders. We just resolved one that had other issues too, but I think they were going by this schedule for the document failures.

...yet.

We just closed one, timely restated for GUST but late interim amendments and EGTRRA restatement as I recall. Initial IRS "offer" was substantially higher, but eventually they followed the audit CAP schedule in RP 2008-50.

"It is the inevitable habit of bureaucracies, at all times and everywhere, to assume ... that every citizen is a criminal. Their one apparent purpose ... is to convert the assumption into a fact." - H.L. Mencken I keep this quote under my desk blotter, it helps me deal with the insanity. Hopefully it will help you too.

Something is off. A single member LLC is generally a disregarded entity and reports income on the member's Schedule C. Is this a Form 1065 K-1? Or perhaps and 1120S K-1?

One of the most common reasons is to continue to self trustee the plan. There may be a number of assets that are not handled by most IRA custodians that the trustee is perfectly capable of handling. In some cases if there are notes, mortgages, rental properties, etc. creating monthly transactions, having a self-trusteed 0% MPP can cost less than IRA custodial fees since the trustee can handle the receipts, payments and banking personally.

I think the "substantial and recurring contributions" issue is still a problem. We continue to use 0% MP for these.

Gary, - Presumably it's an S-Corp, so W-2 and K-1 is SOP. But bpsep is correct, K-1 income is not plan compensation. 8 years? Can you even amend returns that far back? Statute of limitations is 3 years. Continuing to pay 6% per year doesn't seem like a good idea. Why not take out the excess and stop the bleeding? I mean as a U.S. taxpayer, I'll thank you for your voluntary contribution to reduce the national debt if that's what you want to do.

Amend the DB to a 24 month eligibility period and kick the problem down the road to 2014.

Who is the PA? Apparently not the employer? Why did the PA wait 5 years to deal with uncashed checks? Was the check drawn on a plan account or some sort of omnibus account? Do they know the original check was delivered to the participant or the other plan? Presumably since it was intended to be rolled over no taxes were withheld and the participant did not include it in income. Seems to me the PA or the plan itself still has possession of the participant's money since the check wasn't cashed, the check is stale dated now, so simply reverse the check entry and use the funds to reinstate the account in the plan. It all works out (until the participant asks for make up earnings for the last 5 years, but that's another thread!)