RatherBeGolfing

Did you mean Hurricane Ian? NC is a declared disaster area for Ian. "Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief." If your TPA business is in NC, the answer is almost certainly yes. For employees working from NC but the TPA is in a different state, it gets a little tricky. I could see a situation where the NC employee had certain records that the non-NC firm cant access after the storm as qualifying for relief. In my situation at my prior firm, we had several offices throughout the state. A disaster hit the area where our main office was located, but not the other offices. Because a lot of the information needed was at the main office, this interrupted work from the other offices. We used relief for clients of all offices with no issue from the IRS. The matched the Zipcode of the main office to a county qualifying for relief.

Thanks John!

Yea this is the answer I'm looking for as well. I have never been a fan of the "attach a statement saying the audit isn't ready just to get it through EFAST" approach, but the fact that DOL has to give you 45 days to fix it has had me use it on occasion. If the DOL is sharing their data with IRS (who is not required to hive 45 days) that really does change things up a bit. I don't mind a change, I just want to know best practice of addressing the issue going forward.

That's what I'm thinking too. The DOL seems to be more efficient at finding late/incomplete filers early on, so it wouldn't surprise me if they are sharing with the IRS...

Well, I'm not sure that it will take them a lot longer to catch up. The DOL has been systematically looking at filing about 30 days after the due date. If you haven't filed, they send an email saying something along the lines of "your last 5500 had participants at year end and wasn't final, so you should have filed your 5500 month" . You have a few weeks to file DFVCP. This might give you longer than your current example though. There is a webinar on retroactive corrections later today, I'll float the question there to see if anyone else has had this experience.

Ok. So you aren't disqualified from DFVCP (CP-283 would disqualify a one participant plan from relief under the IRS late filer program) but its a big change from a "hey your filing is incomplete, fix it within 45 days" letter. I just had this conversation with someone in my office this morning, and I may need to revisit that discussion if this is the new normal...

Hey Austin, So they sent a CP-283 right off the bat? Or a 403/406 notice?

Tom, that is great to hear! A wonderful gift indeed!

Personally, I'd prefer to have all force-outs go to a default IRA. Cash-outs are notorious for going uncashed, which creates the headache of stale checks, withheld taxes, and so on. For purposes of this discussion I'm not going to go into the constructive receipt issue. It is very simple to select a default IRA provider these days, and they do most of the heavy lifting for you. It's also often at no cost to the sponsor. @Peter Gulia is the client concerned about liability for selecting and monitoring the default IRA provider? Or is there another reason for wanting to stay away from them?

You are probably referring to the "Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline" part of the relief. The IRS will (or is supposed to) cross reference the location of the taxpayer and automatically apply the relief based on zip code. Relief based on a service provider in the disaster area is not automatically applied by the IRS since they don't have the information to cross reference. Expect correspondence, but relief is still granted based on the location of the service provider. Relief based on service provider location is not determined on a case by case basis, they are not going to apply a facts and circumstances test to determine whether the PA could have filed timely. They will simply verify that the zip code of the provider is in the disaster area. What can you do as a service provider? You can submit a bulk request from practitioners for disaster relief, which lists clients impacted due to practitioners location in a disaster area. This alerts the IRS that taxpayer is entitled to relief due to the location of the preparer. While the IRS will not tell you this up front, you should also attach the explanation to your filing. I had several IRS employees tell me this a few years ago when a hurricane knocked out the office power for 10 days in September-October. If you have a POA you can also call the IRS to identify the client.

I agree as well. The notice (if required) should be delivered to participants within a reasonable period before the beginning of each plan year. at least 30 days but no more than 90 days is deemed to be reasonable, but other periods can be reasonable as well. Personally, i find it unreasonable to deliver a plan notice for a plan that does not even exist yet. So if I sign a plan on 10/1, 10/1 is the earliest day the notice could be delivered (and I would argue that is completely reasonable). I agree with Cusefan that the plan is supposed to be ready to accept deferrals for 3 months, so 10/1 may be pushing it unless you have a backup plan for deferrals.

Ugh I loathe this kind of "marketing". I once had a client get one of these where they claimed the sponsor could be in big trouble because per the plan characteristics, the plan didn't use DIA's. It was a pooled profit sharing plan, with no 401k provisions...

They both will eventually.

Happy to help Peter. Being curious in this industry gives you many rabbit holes to go down.

Outside of VCP (where just about anything is possible), I don't think it is possible. Peter, even if you established and merged plan 002 with plan 001 immediately and retroactively, why wouldn't a 5500 for 002 be necessary? The financial reporting would be in plan 001, but you would still have to report participant counts and plan characteristics for plan 002 since they are eligible for the PSP at creation. If we accept that creation of plan 002 created the eligibility for a PS contribution, that plan existed and must be reported. Creative solutions to the retroactive merger aside, I don't see a way out of the reporting.

@Peter Gulia @Luke Bailey Thank you both! Your explanations clarified it for me somewhat (since the issue isn't exactly clear) and gave some great jump off points for research.

Luke, can you expand on this? I could see this come up if the beneficiary designation is in question for some reason, but lets assume that the beneficiary designation is signed sealed and delivered with no defects. What state law(s) is emerging (probate?), and what arguments are made to overcome preemption by ERISA? Aren't Supreme Court cases like Egelhoff and Kennedy very much on point here?

Depends on your document... I'm not crazy about this kind of set up, but if you are going to use it you need to be specific in the document or you can end up with a mess. Right now it sounds like you would have a Trustee to Trustee transfer based on the event that triggered the move from one plan to another. A better way is to structure your excluded/eligible employee caveats in the plan so that an employee stays in the plan they were in when they first met eligibility. This way you don't have switching back and forth based on location, last name, division, etc.

Thanks all!

Yes, but not by much. I would also say that there is no reason to NOT have a bond with an inflation guard / escalation rider/ add your favorite name here. There is just not enough of a premium difference.

Yes, per the document it should have been allocated in 2018, and this is probably the only thing that can be done at this point. Just hoping someone had an idea I had not thought of yet

Client is a small company with a 401k plan. Current employees are owners and one of owners children. Last non-related employee terminated in 2018. There is a small forfeiture of $1,500 in the plan. No participant has had any income after 2018. There are no unpaid fees, and no income to base an allocation on. Allocating forfeiture based on account balance has been mentioned, but I don't see how that would work since forfeiture allocations are annual additions, and 100% of the participants income is $0... Any ideas other than revising 2018 to allocate the forfeiture? Thanks!

Thank you for your explanation Peter. I did misread your prior post, and I agree with your view that if ERISA allows a the plan to not pursue a small overpayment on the basis that the cost would outweigh the benefit, the same principle should apply if the employer is is the one responsible would be responsible for the expense.

Peter, can you expand on this? The way I read it, I would slightly disagree. If it would be imprudent or unreasonable for the plan to pay, it is not an expense that can be paid by the plan. In that situation, I don't think it matters whether the employer has a contractual obligation to pay or not.

Peter, having worked with a lot of plans like these with my former employer, I don't think that simply being able to provide the statement is an issue. The big admin software providers have a solution for it. The bigger issue is timing and capability top get the right data into the LII. Many TPAs with plans like these (SDBA plans, or platforms with some SDBA's) only do an annual valuation and may get the statements from the client anywhere from January 1st to October 15. Having the ability to provide the LII through the software and being able to get the data into the system for an accurate LII are two very distinct issues. This is the kind of issue that makes me very happy to have moved away from the "20 different RKs and 20 different SDBA providers" type of practice. It started getting a little iffy to me when the DOL went after brokerage windows in FAB 2012-02 (before the revised FAB after the industry outcry)