RatherBeGolfing

Following up on this since it was just discussed from the podium at the "ask the experts" session at ASPPA annual. The conservative answer was to file as a delinquent filer when the audit is available. If you do file on time but incomplete, you still have to answer the questions truthfully, meaning that if you attach an "audit coming soon" page in place of the audit, you also have to answer that the audit was not attached on Sch H. In other words, when you amend to include the audit, you also amend to answer the audit related questions on Sch H. The DOL will mine the filings for data, and one of the things it looks for is large plans that file without an audit, and flag them for manual review and follow up. How are others preparing schedule H if filing without an audit? Do you answer the Sch H questions as if the actual audit was attached, and attach an "audit coming soon" note, or do you actually prepare Sch H saying no audit attached? *edited for clarity

Denise, the only mention of distributions of less than $200 in Notice 2020-62 is the paragraph in the sample notice explaining that withholding or a direct rollover option were not required, but that it is eligible for a 60 day rollover.

That isnt the issue. The new penalties apply to returns required to be filed after 12/31/19, yours were not. The penalty amount is a programming error, they had the same issue early 2020 and fixed it, but the fix somehow got rolled back (I confirmed this with IRS last year.) As for asking for the same form again, it is probably a mail issue. The mail sorting and processing at the IRS is still facing backlogs. I had some stuff mailed in October 2020 that still had not made it to the right place by July 2021. In July, I was told to expect longer delays for a while when you send them papercopies.

Absolutely. Im just saying it may be one of the reasons for the misconception that the notice isn't required for payouts less than $200.

There is no exception for less than $1,000. You have to give them notice before you do the involuntary distribution. There is an exception to the WH requirements when the total distributions for the year is less than $200 (or for the first distribution of less than $200 if subsequent distributions gets you over $200). My understanding is that there is no exception to the the 402(f) notice requirement for distributions under $200, but some of the language in the notice will not apply to a distribution of less than $200.

Good point, so the return would not be treated as incomplete/failure to file. I still think consequences are possible if this is abused (always filing incomplete, or as a preparer, filing many incomplete returns year after year)

I would say that this is the case until it isn't. If you abuse the 45 day "grace period" (for lack of a better word), I would not be surprised if they simply started marking your return (if you are the plan sponsor) or returns (if you are the preparer) as incomplete and therefore not actually filed.

I think Leading Retirement Solutions will do bundled plans for that industry

Thanks!

I'll throw another twist into this scenario. How are the employees compensated for this "backpay"? Isn't it usually an award rather than compensation for the services actually performed? That is an important distinction to make, as compensatory damages would not be compensation for qualified plan purposes, and lost benefits should have been considered when the award was calculated.

@Dave Baker Im not sure if you have tweaked anything since BGs post, but it looks fine on my laptop. On mobile (for me), the job ads appear after the first page of "latest posts", which is fine too. It made the ads more visible, but not obtrusive. It does not change or lessen my enjoyment of the site

I mean if you ask the IRS, they tell you to use "state-disaster-FEMA#". Would it cause an issue to just put Ida, maybe not, but why risk it. With the FEMA #, they compare the zip on 5500 with the zips granted relief.

Generally, the IRS likes the following formula: State - Disaster - FEMA # So for Ida in Louisiana you would enter Louisiana Hurricane Ida FEMA 4611

@Luke BaileyI'd offer a different interpretation, and say that you don't necessarily need to treat every participant the same, but you do have to treat reasonably similar circumstances the same. In other words, if you do an interim valuation for Joe due to a market decline of 10% from the last valuation, you don't necessarily have to do it for Jane when the market is up 2% from the last valuation. I'd put a policy in place that dictates when an interim valuation will be done. The policy would depend on the plan, in a small plan, you might have so few participants that you could do an interim valuation for each termination, but in a bigger plan, it might be triggered gains or losses that exceed a certain threshold. We have a small plan that put a policy in place last year that called for an interim valuation with the valuation date being the last day of the month following a distribution request. This was done to allow sufficient time time for the valuation to take place, and so that there was always at least a month between the request and the valuation date, making it impossible to strategically request a distribution due to a sudden shift in the market.

What kind of account are you dealing with? Just tell them to close the account and keep the 5 cents, or asses 5 cents in fees. its a rounding error, no one is going to give you a hard time about 5 cents.

Well they must have processed a bunch of 5558s recently because it seems a lot of folks are getting notices. Assuming you have proof of shipment and delivery, get a POA on at least one of the cases, and call until you get through. I probably re-dialed 50 times the last time and I finally got put on hold instead of disconnected. After you get through, you plead your case (with prof of timely shipment) and you explain that you sent them bulk and would like to provide a list rather than deal with 150 POAs. Depending on circumstances, they should let you fax a list or send a list on electronic media. The last electronic media I sent was in October of last year, and it wasn't processed until April... They are ware of these issues those so most of the folks will be pretty understanding and will find a way to help. Must haves before you call to avoid a wasted 3 hour call: - POA - Proof of mailing the 5558

How large?

First payroll won't process until mid October - so its tight on time but doable Thank you both!

It's one of those days and this just came up A client that does not currently offer a retirement plan just (like last night) acquired a new division with employees who are under a CBA. The CBA states that the employees must have access to a 401(k) plan with a safe harbor match and an additional fixed match. He currently has about 40 employees, and the new division will add 7-8 employees covered under the CBA. Since it is last minute, he wants to put the plan in place today, but exclude all employees not covered by the CBA. The 7-8 CBA employees are all NHCEs, all owners and HCEs are part of the excluded group. I know I can do it from a document perspective, and since no HCEs will benefit I'm thinking that covering a small number of employees will still work, but something is telling me Im forgetting something.... Anyone see a an issue with only the CBA employees having access to the plan even though they are all NHCEs? Thanks

Reporting to SSA sounds like they simply reported you as a code A on Form 8955-SSA because you had not received a distribution of all assets by the and of the year following the year of termination. This just means that the plan still holds assets for your benefit. Unless you receive a distribution of those assets AND the employer reports that distribution to SSA, the SSA will send you a letter at age 65 saying you may have retirement assets in the following plan(s).

IRS rep? If the returns are truly late and you still have an opportunity to use the late EZ correction program, do so ASAP. Even after they knock it down to the pre-2020 penalty amount, you want to take advantage of paying $1000 instead of $30,000

Why would someone from Relius be moderating the message boards on a third party site?

You can get a bond with retroactive coverage. I know Colonial Surety does them, not sure about other providers

Last year, they sent out notices for pre 2020 plan years using the post 2019 penalty. This was fixed at the time, but may back again. It is not that uncommon to have wrong dates on these notices, so could be either really. Agree with above, call the IRS (with a POA so you don't spend 3 hours on hold just to have them say I cant talk to without a POA)

Yep, another vote for run. While you are doing so, make sure to follow your engagement agreement (notify in writing, bla bla bla) I had a similar one recently that was 2 years behind on safe harbor match contributions. I told him I would resign and not prepare any government forms, nor would any else if her persisted with the "can't pay" BS. It was really silly too, because most of the safe harbor contribution would go to him and his wife. It took me, the CPA, and his FA to convince him that the trouble he could or would be facing (including fines and possible criminal charges) if he didn't fund the contributions (or made other arraignments through VCP) just wasn't worth it. He finally "found" the money and made things right (contribution plus actual rate of return).