Fully Vested

Mike, thank you so much for sharing the text. The IRS' model VCP form (Form 14568-D, August 2016 version) for this type of failure (adoption of a qualified plan with an active SIMPLE in place) suggests that correcting it requires only to cease contributions to the SIMPLE upon submitting to the VCP. Would the VCP submission correct the "invalidation" of the SIMPLE contributions for that year such that (a) the amounts contributed for the year do not have to be returned to the employer or participant and that (b) no excise taxes would follow? This sounds too good to be true. Also, Section 4.10 of Rev. Proc. 2016-51 suggests that intentionally causing a failure is an egregious failure for which the IRS can "impose a sanction that may be larger than the user fee..." This sentence provides no cap on the amount of such a sanction. Sounds like such an intentional failure could be risky. Anyone have any experience with this? I have a sponsor that would like to adopt a qualified plan, and already has a SIMPLE, but intends to grant greater contributions to all participants than it could through the SIMPLE by itself. I could see the IRS coming down hard on an employer using a new qualified plan to limit contributions to a SIMPLE, but that is not the case here. Thank you! Jason "Fully Vested" Douthit

The VCP is an IRS program for tax qualification issues. Your problem is essentially a missing or incomplete 5500--it is a reporting issue. I would be concerned that the DOL might assert that failing to file the correct 5500 (and Schedule I) is tantamount to an incomplete filing and that late penalties can be assessed on all the years that the incorrect 5500 was used and not corrected. That could be very expensive. I think the best, safest route here would be to refile on the correct 5500 for all affected years and make a DFVCP submission (this is a DOL program for late 5500 filings). This would, of course, restart the limitations period for review by the DOL and IRS on these years, but if the argument is made that the prior filings were insufficient, then the limitation period on those filings has (arguably) not started running anyway. Of course, this is just my humble opinion and you must do your own research and reach your own conclusions. Hope this helps. JD

Help! I need to obtain the text of the IRS' Q&A 36 from the 2000 ASPPA Conference held in Washington DC. If you have it, please send me a message and let me know how I can get in touch with you! Thank you.

We have a takeover client with an existing 401k Plan. The plan sponsor cannot locate the original document. The plan was first effective in 1997 so (I believe) that the original document would have been a TRA 86 version. We want to draft a replacement document and submit it to VCP. However, we use Relius and their software will only produce docs going back to the GUST restatement cycle (2001 to 2003). Does anyone know of a provider that can issue a TRA 86 document in a VS or prototype format?

Flyboy, Where are you able to find TRA '86 documents? I have a takeover client that is missing their original plan document (first effective in 1997). We use Relius, but they only have documents going back to GUST. Thank you!