RatherBeGolfing

I'm stealing it... But I'll throw in an ¡Ay, caramba!

They are called pre-approved plans now rather than prototype or VS

I wouldn't rule any argument out, but I don't see an exception to employer intent in the rule. It is an employer initiated action which adversely affect the rights of employees to vest in benefits under the plan. Seems pretty textbook when you look at the rule. From practical point of view, I have had this conversation with clients before, and it usually goes like this: "I know its unfair, but the amounts are pretty small. Is it really worth it? The IRS will probably take the opposite position, and if we have to fight it you will pay me more in fees just to argue it than it will "cost" you to vest contributions you have already made?" They usually say something about being screwed by the government and agree it is better to just vest the benefits and be done with it. On the other hand, I work with some government contractors. Sometimes, a contract expire or don't get renewed while you are still waiting on other bids. In those situations, it is not always possible to retain contract employees in between contracts. You can have a reduction of 50% in one year only to win a bid early next year and have to rehire the 50% and then some. The amounts here can get pretty sizeable.

No. For example, if the employee initiated the severance-from-employment.

Employee is paid $70,000. Employer increases pay to $75,000, with $5,000 funding the employees DCAP. The DCAP isn't used and the $5,000 is forfeited back to Employer. No one benefits from the $5,000 other than using $75,000 rather than $70,000 as compensation for the calculation of profit sharing contributions. Correct? Are they really avoiding taxes?

No. You would respond to the penalty letter with the DFVCP information.

To the best of my recollection, it goes like this: 1. File late (not DFVCP) 2. Get IRS late filer penalty letter 3. Go through the DFVCP steps, including payment 4. Respond to IRS late filer penalty later with certain information from the DFVCP filing.

The due date of the 5558 is the due date of the original return. If July 31 falls on a Sat, Sun, or legal holiday, the return may be filed on the next day that is not a Sat, Sun, or legal holiday.

I still do some, but I do have a 5 year old I could pay some reasonable compensation to

What is the going rate for data entry and census review? 😎

Well, for filing purposes, 2% shareholders are treated as partners and would file an EZ. Technically, the plan itself is not a one participant plan because the definition of an employee benefit plan was not amended.

The electronic filing requirement for the 5500 EZ isn't really there because they expect a bunch of one participant plans with tons of W-2s , it is because there is a general electronic filing requirement when you hit 250 required returns that includes the 5500 series, so they have to require electronic filing of the EZ under those circumstances. Same thing for the 8955.

Why spend time disproving it? The TPA said the "rules say" he needs to wait, have them cite the rule(s) that says so.

https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/temporary-implementing-faqs-lifetime-income-interim-final-rule.pdf

And the founder is running for mayor in NYC

Lets be very careful here, there is no such thing as a de minimis amount for late deferrals. The increase in the de minimis amount in Rev Proc 2021-30 are related to excess contributions and overpayments to a participant. The participant benefitted more than he/she should have, which is the opposite of a late contribution.

so people in their 40s? Thats a new one for me.

Yea I don't disagree with you. It isn't something I would normally do, but I do have a few clients who want us to double and triple check everything plan related, and are fine with the associated cost. Ideally, you have lower cost staff for remedial work, but I don't think that is the case for most TPAs

I agree, but I also think that some clients want more handholding and are willing to pay for it. If this is a client that is a client that is mainly concerned with cost, I dont think they will stay a client for too long.

The amount shouldn't matter to this discussion. The client normally relies on the 7 bday safe harbor (deemed to be segregated at the earliest date), the transaction in question took 8 bdays due to unusual circumstances. The question is, did the unusual circumstances cause a small delay during the 7 bday window to make it 8 bdays, or was the 8th bday the earliest time it could be deposited due to the unusual circumstances? If its the former, it should technically be reported on the 5500. If it is the latter, I think you have a reasonable argument for calling the deposit timely and leaving it off the 5500.

No need. IRS and DOL are well aware of the issue, but haven't worked out the practical solutions yet. Simply be prepared to follow up on correspondence and explain that it was a retroactively adopted plan, the filing is not late even though it is filed after the 5558 deadline.

https://www.irs.gov/pub/irs-drop/rp-21-30.pdf

Doesn't back door Roth usually refer to a non-deductible IRA contribution that is converted?

That is even more troubling... Where did the employees funds go if the check bounces?