MarkS

Accountant filed the 6/30/2021 5500 late to stop the running of penalties. Do you think it can be refiled under DFVC program with outstanding 2022 5500 now since no notice has been received yet? The accountant wants to

Nothing on gross-up. The Plan does provide that the Participant is solely responsible for all 409A penalties, and Employer has no obligation to indemnify. This is the 20% excise tax payable when correcting a mistaken deferral under the 2008-113 program. Thanks

Any prohibition against Employer reimbursing Employee the 20% excise tax when using the program?

The Plan was amended after the hardship distribution at issue, but the effective date was retro to that time period. I think there are going to be issues with the effective dates of these hardship amendments. Thanks for the feedback.

Plan was amended to allow for QNECs as hardship source, but they weren't offered as a source to Participants. Plan's only QNECs were two years of safe harbor contributions from 5 or 6 years ago. Only one participant requested a withdrawal of the maximum amount available. Can we treat as an operational error and allow a withdrawal now?

I've done this, but the situation is fairly unique. The organization was an apprenticeship training program. Initially qualified as a 501(c)(9) organization, we have been granted 501(c)(3) status as an educational organization. The benefit is to qualify for exemptions for property tax. In NY it requires registration and annual filings with the Attorney General's office.

I just went through a DOL audit where deposits were late for a similar reason; the new record-keeper wouldn't ok any pulls from the employers (multiple employer plan) to the new custodian until all prior accounts had been validated. The auditor asked for the blackout notices and was ok with the late deposits.